Market Performance in October and November
October brought a slowdown for investors, with the S&P 500 dipping 1.1% amid higher bond yields and late-month weakness in the technology sector. The 10-year Treasury yield moved above 4.3% as strong payroll numbers and persistent core inflation reduced expectations for aggressive rate cuts from the Federal Reserve.
The dollar strengthened while oil prices eased as tensions in the Middle East subsided. Corporate earnings remained generally solid, with many companies reporting stronger-than-expected operating margins. After nine months of strong market gains, investor sentiment cooled as valuations stretched, serving as a reminder that periods of rapid growth rarely last forever.
Economic Conditions Remain Stable
Despite recent market volatility, the broader economy continues to show resilience. Household balance sheets remain healthy, and the labor market is still strong, supporting consumer spending. However, policy uncertainty and potential tariff changes may introduce some caution heading into year-end.
Earnings and Market Outlook
Third-quarter earnings have been encouraging, with roughly 86% of companies beating expectations and projecting continued growth into 2025. Analysts are forecasting around 11% earnings growth next year, supported by strength in financials, industrials, and technology sectors tied to artificial intelligence and productivity gains.
With the S&P 500 hovering near 6,900, we see room for moderate upside through the end of the year. Our outlook remains constructive, with a preference for equities, particularly quality cyclical and small-cap stocks that may benefit from policy tailwinds. In fixed income, maintaining a balance between short-duration bonds for yield and longer Treasuries for potential disinflation benefits can help manage risk.
Position for Growth, Not Headlines
While market swings may continue in the short term, the underlying expansion remains on track. Staying focused on fundamentals and maintaining a diversified, long-term approach will be key through the remainder of 2025.
If you’d like to discuss how these market trends could impact your portfolio, schedule time with your advisor to review your strategy and ensure you’re positioned for the road ahead.
References
J.P. Morgan Chase & Co. (2025). https://www.jpmorganchase.com
Advisory services offered through NewEdge Advisors, LLC, a registered investment adviser, doing business as Middlebrook Wealth. Securities offered through NewEdge Securities, LLC, Member FINRA/SIPC. NewEdge Advisors, LLC and NewEdge Securities, LLC are wholly owned subsidiaries of NewEdge Capital Group, LLC. Middlebrook Wealth does not provide tax or legal advice. Therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation.
