November marked the most volatile month for the S&P 500 since the tariff-driven sell-off earlier this year. At one point, on November 20th, the index was down nearly 5% on a daily closing basis before staging a strong rebound and finishing the month slightly positive. Below are returns for the popular benchmarks that investors track (Data provided by Y-Charts & Commonwealth Financial Network):

S&P 500 Index:+0.13%
Dow Jones Industrial Average: +0.32%
Nasdaq Composite Index: -1.51%
Russell 2000 Index: +0.6%

After a relentless seven-month rise in equities, investors finally saw the long-awaited pullback. Sentiment swung sharply toward fear, even though the S&P 500 never fell more than 6% from its yearly highs. Historically, when sentiment becomes this bearish this quickly, it often sets the stage for a short-term rally. That pattern repeated this month, with stocks bouncing meaningfully over the final week.

The primary catalyst behind the volatility was concern that the Federal Reserve might pause its rate-cut cycle at the December meeting. However, as of November 28th, futures markets now assign an 87% probability that the Fed will move forward with another cut on December 10th (Source: CME Group).

As we have discussed recently, some degree of pullback was both expected and healthy. The volatility index (VIX) spiked mid-month, exactly what you would expect during a temporary bout of market stress. The S&P 500 ultimately bottomed on the 20th and then advanced for five consecutive trading days, extending its streak to seven straight positive months. More defensive sectors, such as healthcare and consumer staples, outperformed, while technology and AI-related stocks saw the brunt of the selling.

With the late-month rally, we continue to view this as a normal pullback within a durable, long-term uptrend, not the start of a broader correction, based on the information available today. Seasonally, December is typically a constructive month for equities, which may help support markets into year-end.

One of my favorite market sayings is that “strength begets strength.” Historically, that has often been true, according to Carson Investment Research, when the S&P 500 is up more than 15% through the first 10 months of the year, December finishes positive more than 71% of the time, with an average gain of roughly 2%.

On a personal note, Kenzie and I welcomed our second daughter, Poppy Kay, into the world on Thanksgiving morning! Mom and baby are doing great, and Mia is already embracing her big sister role. I’m grateful for the opportunity to work with so many families during milestones of your own, and I appreciate your continued trust as we celebrate one of ours.

Happy Thanksgiving to you and your family and as always, don’t hesitate to contact our team with any questions.