Weekly Recap: Markets Ends November Cautiously Higher Amid Interest Rate Cut Expectations

Global financial markets wrapped up November with a cautiously optimistic tone, buoyed by sustained momentum in technology stocks that propelled equities higher amid growing anticipation for a Federal Reserve interest rate cut in December. U.S. equities experienced steady, incremental gains throughout the holiday-shortened Thanksgiving week, fueled by a resurgence in tech sector dominance and reduced trading volumes typical of such periods, which amplified positive price movements.

The most influential driver was the sharp uptick in expectations for a Fed rate reduction next month, reinforced by dovish remarks from several key officials alongside economic data that fell short of forecasts, easing pressure on bond yields. Despite this upbeat trajectory, a trading system glitch on Friday, November 28, sparked concerns by temporarily halting activity across major futures exchanges for currencies, commodities, Treasuries, and equities. This incident underscored market vulnerabilities, including overextended valuations amid signs of economic slowdown and potential policy shifts. Although occurring after the week’s closes, it heightened end-of-month wariness without directly altering weekly performance.

Key Influences and Year-to-Date Performance

The earlier resolution of the U.S. government shutdown in November helped alleviate uncertainty, triggering a relief rally as essential federal spending resumed. However, gains were capped by ongoing worries over trade tariffs’ impact, projected GDP shortfalls, and persistent global geopolitical tensions.

In Europe and Asia: European equities maintained overall stability, concluding the month with modest improvements after hitting record highs earlier. Yet, this marked their weakest monthly showing in several periods, largely due to fears of inflated tech valuations. Asian markets echoed this upward trend, achieving advances through sector rotations.

Annual Overview: Broadly, the S&P 500 posted a minor monthly uptick and remains on pace for a third consecutive year of double-digit returns, rewarding steadfast investors despite a near-bear market dip in April. International stocks have led the way, climbing 23% year-to-date via the MSCI All Country World Index (ex-U.S.), supported by a softer dollar and brighter global growth prospects.

Currency markets witnessed a decline in U.S. Treasury yields, driven by economic data revealing inflation slowdown and labor market deterioration in September, where retail sales rose by only 0.2% monthly (below expectations), and the core Producer Price Index (excluding food and energy) dropped to 0.1% monthly and 2.6% annually, alongside a decrease in the four-week average job change to -13,300 positions. This led to weekly losses for the U.S. dollar due to heightened expectations of a Federal Reserve rate cut in December, coupled with concerns over potential nominations like Kevin Hassett for Fed chair, which could bolster easing policies. In the UK, Finance Minister Rachel Reeves presented the Autumn Budget with tax increases up to £26 billion to bridge a £20-30 billion fiscal gap, potentially paving the way for Bank of England rate cuts and short-term pressure on the pound, despite supporting fiscal stability and reducing inflation by 0.5% in 2026.

In stock markets, PepsiCo’s shares fell 3.9% since the start of 2025 despite third-quarter earnings exceeding expectations ($2.29 per share and $23.94 billion in revenue), with Coca-Cola outperforming, though analysts anticipate a 6.8% rise thanks to strong brands like Lay’s and Gatorade. Netflix’s stock declined 14.3% over the past three months versus a Dow Jones rise, but it outperformed annually with a 17.1% gain since the year’s start, despite weak third-quarter profits ($5.87 per share due to $619 million in tax charges), with projections for a 30.6% increase supported by subscriber expansion and content investments, amid competition from Roku.

Source: Bloomberg

Major Equity Indices

U.S. shares advanced on renewed risk appetite and easing policy outlooks, with market breadth showing notable improvement over the prior week:

Nasdaq Composite: Delivered the strongest performance, up 4.9% to close at 23,366, marking a 21.0% year-to-date gain. This surge was driven by tech resurgence and investor enthusiasm for AI-related stocks, which continue to solidify megacap leadership.
S&P 500: Rose 3.7% to end at 6,849, up approximately 15% year-to-date (or 16.4% including dividends). Despite recording its first monthly drop since spring—a 0.5% decline in November amid profit-taking and economic ambiguity—it still reflects robust annual progress, with earnings consistently beating estimates.
Dow Jones Industrial Average: Gained 3.2% to close at 47,716, up 12.2% year-to-date, with earlier record highs and cyclical stocks leading the charge.
Russell 2000 (small-caps): Demonstrated solid outperformance amid broader market participation and lighter holiday volumes, aligning with enduring economic resilience where growth has stayed firm and recession concerns have largely dissipated.

Currencies, Commodities, and Energy Markets

The U.S. dollar displayed varied fluctuations, remaining nearly flat monthly as traders balanced lower rate expectations. In Europe, the euro struggled to hold above $1.16, influenced by mixed Eurozone data indicating consumer softness and the European Central Bank’s continued caution against rate adjustments. The Japanese yen weakened against risk-on pairs, though a rise in Tokyo’s consumer price index fueled speculation about Bank of Japan policy tweaks.
In commodities, gold staged a historic breakout above $4,200, closing at $4,215.820. This remarkable rally was primarily propelled by rate-cut prospects (lowering the opportunity cost of holding non-yielding assets) and geopolitical anxieties bolstering its safe-haven appeal, culminating in outsized year-to-date gains of +60.60%. Conversely, oil markets traded sideways to softer, with WTI crude up 2.5% weekly to $59.53 per barrel but constrained by policy ambiguities and OPEC+ dynamics versus inventory trends.

Cryptocurrencies

Digital assets showed improved performance amid renewed momentum and focus on exchange-traded fund inflows. While bitcoin endured a sharp November decline overall, it exhibited weekly stability amid holiday-thinned liquidity that exaggerated volatility.

Central Bank Insights

Most statements and cues reinforced a data-driven shift toward monetary easing, elevating December rate-cut odds to 74%. This outlook helped loosen financial conditions, dropping mortgage rates from 7.1% to 6.4%. Meanwhile, the ECB maintained vigilance amid uneven core inflation moderation, and the Bank of England emphasized fiscal credibility and a prudent path. Globally, policy divergences shaped currency movements, with declining average oil prices contributing to expected inflation slowdown from 3% in 2024 to 2.7% in 2025.

Risk Sentiment and Forward Outlook

Risk appetite held firm thanks to subdued volumes, enabling gradual U.S. equity advances led by tech/AI innovations (redefining economies through productivity gains) and easing biases, against a backdrop of receding recession fears, resilient growth, and cooling inflation.

Looking Ahead

As the year nears its close, seasonal patterns point to a robust December finish, with historical averages of 1% gains and 70% positivity over three decades. Markets anticipate a pivotal week ahead (December 1-5), featuring critical economic releases to guide monetary paths, including manufacturing and services PMI/ISM indices, the U.S. PCE core inflation gauge on Friday, December 5—which could directly influence the dollar, equities, and commodities—plus the ADP private payrolls report and ISM services on Wednesday, alongside remarks from ECB President Christine Lagarde.