Equity Overview

Equity performance was uneven in November as eight of eleven sectors rose and three declined.  Healthcare was the best performer.  In a turnaround from October, technology went from best to worst as market exuberance about AI took a pause.  Reflecting the change in sentiment, value stocks outperformed growth.  Volatility increased as the S&P 500 moved more than 1% on 6 of 19 trading days.

Third quarter earnings reported in November maintained the impressive pace in October.  With results now in for 95% of S&P 500 companies, 83% have beaten consensus earnings estimates and 76% have beaten revenue estimates, in both cases better than the 1-year and 5-year averages.

Earnings remained the primary driver of dispersion, with companies that beat and raised guidance, or benefited from aggressive upward estimate revisions, often seeing substantial upside moves, while those with merely in‑line or disappointing results faced quick de‑rating. Analyst commentary and target revisions around key themes such as AI, cloud security, semiconductors, and select consumer names played an outsized role in November’s stock‑specific performance, reinforcing a market environment where fundamentals and estimate trends, rather than broad multiple expansion, dictated leadership.

The forward price/earnings ratio for the S&P 500 at month’s end declined to a more moderate 21.5, down from 23.1 in October but still above the 5-year and 10-year averages.

Macro Overview

Although the longest government shutdown in history ended in mid-November, most government agencies have not caught up with producing their economic data.  One exception is the September employment report generated by the Bureau of Labor Statistics which showed a 3-month job-creation average of 62,000, well below the 2-year average of 137,000.  Private estimates of GDP growth average about 1.9% for 2025 and 1.9% for 2026, which are significantly below the 2.8% GDP growth in 2024.  Consumer confidence data, also generated by the private sector, indicated significant declines in November.

Against this backdrop, markets have been focused on the prospects for an interest rate cut at the Fed’s December meeting.  Those prospects advanced notably after comments from New York Fed President John Williams on November 21.  Williams, who is widely viewed as the second-most influential member of the Fed Open Market Committee behind Chairman Powell, strongly suggested that a rate cut was likely.  After his remarks the odds for a cut rose from 25% to 80%.

Bond yields and rate expectations continued to influence sector preferences, as investors assessed how far the prior easing of policy and any future moves might support earnings, balance sheets, and valuations. Within this environment, equity markets remained sensitive to macro headlines around inflation, employment, and consumer strength, yet rewarded companies that could demonstrate clear, data‑backed growth in revenues and earnings, particularly in areas tied to productivity‑enhancing technologies and durable consumer demand.