Author: Montecito Capital Management
November wrapped up with a mixed finish for the major U.S. indexes. The S&P 500 ended the month barely positive at about +0.1%, the Dow rose around 0.6%, and the Nasdaq fell roughly 1.5% as tech stocks continued to feel the weight of valuation concerns.
But the month felt far different than those final figures suggest. November was choppy from start to finish—first a sharp pullback in the middle of the month, then a strong rebound heading into the close. At one point, all three indexes were several percent below their monthly highs. By the end, though, the S&P and Dow had climbed back roughly 3–4% from their November lows, helped by a late improvement in sentiment.
Why the Late-Month Turnaround Happened
The early-November skid was driven mostly by stretched valuations, particularly in tech and AI-linked stocks that had run hot earlier in the year. As those names corrected, broader indexes lost steam.
But sentiment shifted quickly in the final week:
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Rate-cut expectations picked up, with investors increasingly betting the Federal Reserve could begin easing as soon as December.
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Holiday shopping data came in stronger than expected, lifting retail names and easing concerns about consumer fatigue.
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Tech stabilized, recovering from earlier losses even though it wasn’t enough to lift the Nasdaq for the month.
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Cyclicals and financials strengthened, supported by hopes that lower rates and steady consumer spending could carry activity through year-end.
Importantly, the rebound wasn’t driven only by the big tech leaders. Gains were spread more broadly across sectors, a sign that investors saw the mid-month dip as a temporary breather rather than the start of something more serious.
Weekly Snapshot (Week Ending Nov 28)
The final full week of November turned out to be one of the stronger stretches of the fall:
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S&P 500: +3.7%
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Dow Jones: +3.2%
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Nasdaq Composite: +4.9%
It was the kind of broad rally that often signals a pullback has largely run its course.
Bottom Line
November ended on a stronger and more resilient note than it began. The S&P and Dow managed to finish slightly higher for the month after being meaningfully lower earlier on, thanks to improving rate expectations, healthy holiday shopping trends, and some stabilization in tech. The Nasdaq still closed down, underscoring how sensitive the tech sector remains to shifting sentiment.
Looking Ahead: What to Expect in December
December tends to be a meaningful month for markets, and this year is no exception. A few key things to watch:
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The Federal Reserve meets on December 17–18, and markets will be focused less on the rate decision itself and more on the Fed’s updated projections and tone. Any hint about the timing or pace of 2025 rate cuts will be closely parsed.
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Inflation data arrives early in the month, giving the market a clearer read on whether price pressures continue to cool.
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Holiday spending trends—both online and in-store—will help shape expectations for Q4 earnings and overall economic resilience.
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And of course, the usual year-end dynamics come into play: tax-loss harvesting, portfolio rebalancing, and the possibility of a “Santa Claus rally.”
With momentum improving and several market-moving events on deck, December could shape up to be an active finish to the year. It’s also a month when institutional balance-sheet adjustments and tax-loss harvesting can add extra noise to day-to-day trading, especially in underperforming sectors. On the flip side, cash being redeployed into year-end strength can help support markets if sentiment remains steady.
The S&P 500 enters December with a strong double-digit gain year-to-date, reflecting how resilient the market has been despite higher rates and persistent macro uncertainty. Historically, December tends to be one of the more constructive months of the year—particularly late in a bull-market cycle, when investors often position ahead of the new year and corporate buyback activity picks up. While history is never a guarantee, the combination of positive seasonality, solid YTD performance, and easing rate expectations gives December the potential to carry forward some of the momentum that re-emerged at the end of November.
