November Market Review: Market Swings During AI and Fed Questions

During November, financial markets went through a short period of ups and downs that touched many types of investments. Even though most major market measures have shown good growth so far this year in stocks, bonds, and overseas investments, investors remained worried about companies involved in artificial intelligence and what the Federal Reserve (the Fed) might do with interest rates. At the same time, a government shutdown stopped the release of important economic information, making it harder to understand how the economy was performing.

Even with these market swings, many types of investments recovered by month’s end. For people investing for the long term, this shows why it’s important to have a balanced mix of investments that can handle market ups and downs. Smart investing means keeping your eye on long-term goals instead of trying to chase quick wins or reacting to news headlines.

What caused November’s market movements and how can investors keep a steady perspective as the year comes to a close?

What Moved Markets and the Economy in November

• The S&P 500 (a measure of 500 large U.S. companies) went up slightly by 0.1% in November. The Dow Jones Industrial Average (another market measure) increased 0.3%, while the Nasdaq (which includes many technology companies) fell 1.5%. For the full year so far, the S&P 500 is up 16.4%, the Dow is up 12.2%, and the Nasdaq is up 21.0%.
• The VIX (which measures how much the stock market is expected to swing up and down) finished lower at 16.35 after climbing as high as 26.42 during the middle of the month.
• The Bloomberg U.S. Aggregate Bond Index (a measure of the overall bond market) increased 0.6% in November and is up 7.5% for the year. The 10-year Treasury yield (the interest rate on a key government bond) ended the month lower at 4.02%, after briefly dropping below 4%.
• International developed markets (stocks from wealthy countries outside the U.S.) gained 0.5% when measured in U.S. dollars, while emerging markets (stocks from developing countries) fell 2.5%. For the year so far, international developed markets have gained 24.3% and emerging markets 27.1%.
• The U.S. dollar index (which measures the dollar’s strength against other currencies) ended the month at 99.46 and briefly went above 100.
• Bitcoin (a type of digital currency) dropped significantly by about 17% in November, ending the month at $91,176.
• Gold prices ended the month higher at $4,218 but remained below the October record high of $4,336.
• The September jobs report, which came out late because of the government shutdown, showed that the economy created 119,000 new jobs and the unemployment rate (the percentage of people looking for work who can’t find it) went up slightly to 4.4% that month. There will be no October jobs report.

Markets temporarily moved toward safer investments

During November, investors briefly shifted money away from riskier investments like technology stocks, lower-quality bonds, digital currencies, and similar assets. This happened mainly because of questions about whether investments in artificial intelligence companies would pay off and because investors were rethinking what the Federal Reserve might do with interest rates. The S&P 500 has now fallen by 5% or more six times this year, the most since 2022, though this is still close to what typically happens. Some major types of investments recovered in the last days of the month, and the S&P 500 ended slightly higher.

Technology stocks related to artificial intelligence had their worst week since April during the month. Worries about how much these companies were spending and borrowing, their profit levels, and concerns about whether their prices were too high created volatility. However, the underlying business performance stayed strong, with companies like Nvidia reporting healthy revenue and profit growth for the third quarter. Some stocks, including those in the Magnificent 7 group, bounced back after releasing these reports.

Digital currencies like Bitcoin experienced a sharp drop during this period when investors favored safer assets. Bitcoin fell more than 30% from its early October highs above $125,000, briefly trading below $85,000 and losing its gains for the year. While more investors have started using digital currencies, periods like this show that these assets can be highly speculative and go through dramatic boom-and-bust cycles. For this reason, managing risk and maintaining a proper mix of investments continue to be important.

The bond market went up in November, partly because long-term interest rates declined, with the 10-year Treasury yield briefly falling below 4% again. This resulted from new expectations about government policy that could lead to lower rates over time. For the year so far, the Bloomberg U.S. Aggregate Bond Index has gained 7.5%, the best performance since 2020. This has helped provide balance to portfolios that hold different types of investments.

The government shutdown ended but economic questions remain

The longest government shutdown in history ended after 43 days, but the federal government only has funding through the end of January 2026. This means political uncertainty will be back in the news in just a couple of months. That said, markets were generally able to move past the shutdown, even though the lack of economic data made things more challenging.

The government agency that tracks employment released the long-awaited September jobs report, which was originally supposed to come out in October. This report showed that job creation was better than expected that month, bouncing back from weakness over the summer. However, the updated numbers show that 4,000 jobs were lost in August, the second month of job losses this year. The unemployment rate moved up to 4.4% in September, its highest level since October 2021, though this is still low when looking at historical patterns.

A complete October jobs report won’t be released since surveys of households and businesses weren’t conducted during that month, but some of the information will be included with November’s report on a delayed schedule.

What investors expect for the next Fed interest rate cut has changed

These data delays mean that the Federal Reserve (the central bank that sets interest rates) will go into its mid-December meeting without complete economic information. Expectations for an interest rate cut at the next Fed meeting have shifted dramatically, with the probability dropping in mid-November before rising again. Right now, market expectations suggest the Fed will lower rates in December and then again in April or June 2026.

Other economic information, such as how confident consumers feel, has also gotten worse. The preliminary reading of the University of Michigan’s Index of Consumer Sentiment (which measures how positive people feel about the economy) fell from 53.6 to 50.3 in November. This reflects ongoing concerns among Americans about job security, higher prices, and their overall money situations. While many households are feeling financial pressure, poor sentiment over the past few years hasn’t translated into people spending less or companies earning less revenue.

The bottom line? November’s market swings and ongoing uncertainty across the economy remind us that stock market fluctuations are normal. Investors should keep a broader perspective as we approach year end.