MARKET UPDATE
Investors spent the second half of November digesting a
flood of delayed economic data following the 43-day federal shutdown. The
long-anticipated “data dump” revealed a mixed backdrop: the labor
market is beginning to cool, but inflation remains stubbornly above the Fed’s
2% target. This fueled renewed debate among policymakers, with some advocating
for rate cuts while others urged caution. As of November 28, futures markets
had slashed the odds of a December rate cut to just 13%, prompting a
recalibration toward a “higher-for-longer” rate environment.
Despite these headwinds, Nvidia delivered a standout earnings report that helped stabilize equity markets. It’s a blowout quarter, which topped already high expectations and included a bullish revenue forecast, reassuring investors that AI-driven growth may still have legs. The news sparked a five-day rally heading into Thanksgiving, lifting the S&P 500 and Nasdaq Composite, although the Nasdaq still closed November slightly in the red. Outside of tech, corporate developments sent more mixed signals: retail earnings painted a picture of selective consumer spending, and Berkshire Hathaway’s new stake in Alphabet signaled long-term conviction despite regulatory risks.
November ended with markets caught between opposing forces.
Sticky inflation and elevated bond yields, holding near 4.67% on the 30-year Treasury and 4.01% on the 10-year, continued to weigh on risk assets. Meanwhile, softening oil prices offered some hope for consumer relief. The
sharp split in sentiment, which began with a selloff and ended in a relief
Rally underscored a market still struggling to find equilibrium. While
Nvidia’s strength provided a short-term lift, but volatility is likely to persist as investors navigate the fallout from economic distortions and an increasingly
divided Fed
ADVISORS PERSPECTIVE
As we enter the final month of the year, markets ended November on a steadier note after working through several weeks of mixed economic data and shifting expectations around Federal Reserve policy. The delayed reports released after the 43-day government shutdown gave investors a clearer picture of where the economy stands today: inflation is cooling, growth is moderating, and the broad economic environment continues to move toward a more normal pace. Inflation is still above the Fed’s 2% target, but the downward trend has allowed markets to cautiously price in the possibility of rate cuts early in 2026 if progress continues. Treasury yields moved lower during the second half of November, easing financial conditions and supporting a more constructive tone across markets.
Volatility briefly picked up in mid-November as investors reassessed the likelihood of a December rate cut. The VIX (Volatility Index) jumped above 26 during the flurry of new data but quickly reversed back into the mid-teens by month-end. Options markets showed a similar pattern, with hedging activity rising and then unwinding just as quickly once uncertainty faded. These quick swings have been common this year, but the speed of the recovery suggests that investors generally remain confident about the broader economic picture, even though there is still some debate about how soon the Fed may start to ease.
Corporate earnings helped stabilize sentiment. Nvidia once again delivered an earnings report that exceeded expectations, reinforcing the strength of demand for AI-related technology. The strong results helped fuel a late-month rally after a shakier start to November. At the same time, the continued leadership of AI, semiconductors, and automation raises questions about how dependent markets have become on a small group of high-growth companies. Valuations in these areas are elevated, but strong revenue growth and broad adoption of AI tools give businesses a solid foundation for now. Even so, the level of enthusiasm in the sector means markets may react more sharply if earnings or growth expectations weaken in 2026.
Outside of the headline stories, the broader economic environment remains constructive but uneven. Consumer spending has slowed from earlier in the year but continues to grow at a steady pace. Housing activity has started to stabilize as mortgage rates ease slightly, though affordability challenges persist. Importantly, global economic activity is showing signs of improvement as well. Over the past several months, global output and global leading indicators have both trended higher, pointing to healthier conditions abroad and helping support a more stable economic foundation. These improvements, paired with gradual stabilization in domestic economic indicators, have contributed to a more balanced backdrop even as certain sectors continue to feel near-term pressure.
This update is not intended to be relied upon as forecast, research, or investment advice, and is not a recommendation, offer, or solicitation to buy or sell any securities or to adopt any investment opinions expressed are as of the date noted and may change as subsequent conditions vary. The information and opinions contained in this letter are derived from proprietary and nonproprietary sources deemed by Hilltop Wealth & Tax Solutions to be reliable. The letter may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecast made will materialize. Additional information about Hilltop Wealth Solutions is available in its current disclosure documents, Form ADV, Form ADV Part 2A Brochure, and Client Relationship Summary Report, which are accessible online via the SEC’s Investment Adviser Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC # 801-115255. Hilltop Wealth Solutions is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting, or tax advice.
