Market Commentary - November 2025

November 2025

Global market momentum continued in October, setting record highs

Global equities extended their upward momentum in October, with major indexes across regions posting gains and several reaching new all-time highs. Investor sentiment remained resilient despite persistent volatility early in the month, as markets continued to build on the strong performance seen since the early April tariff lows.

In the U.S., the tech-heavy Nasdaq once again led the way, rising 4.7% in October and further strengthening its position as the year’s top-performing major index with a 22.9% YTD gain. The S&P 500 advanced 2.3% and recorded eight new record highs, while the Dow rose 2.5% and set record highs as well. Small-caps gained 1.8%, but mid-caps lagged, slipping 0.5%, reflecting uneven performance beneath the surface.

Q3 corporate earnings remain broadly strong and continue to underpin valuations; with 92% of S&P 500 companies reported, 82% have delivered upside EPS surprises and 76% have beaten on revenue (FactSet).

Trade developments were a key driver of market action. Elevated tariff concerns contributed to early-month volatility, but tensions eased following a closely watched meeting between President Trump and President Xi. The two leaders reached a one-year informal agreement to pause further U.S. tariff increases and to limit China’s rare earth export controls—news that markets broadly welcomed.

International equities continued their strong run. The MSCI EAFE index climbed 1.1%, while emerging markets surged 4.1%. A weaker U.S. dollar—down 8% YTD—has provided a meaningful tailwind for non-U.S. assets, though the dollar did firm modestly in October, rising 2.1%.

Monetary policy remained in focus as investors digested the Federal Reserve’s widely anticipated 0.25% rate cut delivered at the late-September FOMC meeting. However, Fed Chair Jerome Powell struck a more hawkish tone than markets expected, dampening hopes for a more aggressive easing cycle. While investors still anticipate one additional 0.25% cut in December, expectations have grown more cautious.

Economic data was limited due to the extended federal government shutdown, leaving markets without their usual cadence of timely indicators. The data that was released showed continued signs of labor market cooling. Meanwhile, inflation edged higher in September, though underlying CPI readings came in cooler than anticipated—an encouraging signal for policymakers and markets alike.

In fixed income, bonds managed to extend their gains amid a slight decline in interest rates. The Bloomberg U.S. Aggregate Bond Index rose 0.7% in October, lifting its YTD return to 6.8%. The yield on the 10-year Treasury fell 0.05% to 4.11%, reflecting modest demand for duration as growth and policy uncertainty persisted.

Overall, October delivered a mix of steady market performance and shifting macroeconomic currents, setting the stage for a closely watched final stretch of the year.

Market Update: November

November has opened on uneven footing, even as the federal government reopened after a 43-day shutdown. Markets initially rallied in anticipation, with the Dow briefly touching new record highs before pulling back on the news. Small caps and the tech-heavy Nasdaq led the declines as the AI-driven momentum trade cooled. According to the Congressional Budget Office, the prolonged shutdown is expected to reduce real fourth-quarter GDP by roughly 1.5%, a meaningful near-term drag on growth.

Interest rate expectations also fueled volatility. Confidence in another 0.25% Federal Reserve rate cut at the December FOMC meeting has waned, pushing rates modestly higher through November. As agencies work through the backlog of economic data delayed by the shutdown, markets will be digesting a flurry of indicators for a clearer read on underlying conditions.

Overseas, international equities saw their own bout of volatility, though the MSCI EAFE index has managed to remain positive for the month so far.

The Outlook

Despite a challenging backdrop—including the lengthy U.S. government shutdown and a higher-than-usual dose of macro uncertainty—global financial markets have delivered strong year-to-date gains. Investors who stayed patient and disciplined have been rewarded, and diversification has continued to provide valuable ballast across asset classes.

Looking ahead, elevated valuations, lingering inflation pressures, and continued economic uncertainty suggest that volatility is likely to remain part of the landscape. With risks still in flux, maintaining a long-term focus remains essential. We continue to emphasize discipline, patience, and diversification as the most effective path forward.

Call your Nelson Advisor today at 800-345-7593 to discuss your portfolio and any concerns.

~ Your Nelson Securities Team

*Past Performance is No Guarantee for Future Results; This article is for informational purposes only and does not constitute investment advice.