26 Nov Market Update: November 26, 2025
Volatility is back. Of course, volatility means prices went down – few use the term when prices go up!! There was actually a faint whiff of panic in the air on Thursday after the market started to roll over despite exceptional earnings from NVIDIA the night before. Even a decent unemployment report, released on Thursday morning, did little to put a dent in the dark side.
Investors were left confused at the relative lack of news driving the selling, so some started to grab at the proverbial straw. There was a flurry of articles early Thursday morning that claimed that NVIDIA’s earnings release put a stake in the heart of the bearish thesis about overbuilding in the AI space. But the next day, there was another flurry of articles (some by the same authors!!), claiming that NVIDIA’s earnings really highlighted how fragile the AI trade was.
This was a great example of how the news typically follows the price action, rather than the other way around. Rising prices create their own positive narrative – price declines create the opposite. But the more balanced take on this week’s market action is probably the most appropriate – Ed Yardeni (economic expert) summed things up pretty well on Friday:
“The stock market pullback that we expected at the start of this month may be turning into an outright correction, especially for the Nasdaq. The S&P 500 is down 5.1% from its October 29 record high. The Nasdaq is down 7.8% over this period (chart). Both fell below their 50-day moving averages today. We doubt that either will fall to their 200-day moving averages, currently at 6,157.70 and 20,158.34.”
Markets correct, and generally corrections don’t morph into anything more meaningful unless something goes wrong with the underlying economic or earnings pictures. For example, Bloomberg noted this week that tech stocks in 2000 really didn’t start their major decline until profit warnings started to roll in, as you can see below.
This certainly isn’t the case in 2025, at least so far.
Obviously, we haven’t seen much on the economic statistics front during the shutdown, but what we do have to go on looks ok. Thursday’s payroll release for September was decent. Payrolls were up 119K, well above the gain of 50K economists expected. August’s number was revised to a loss of 4K.
The unemployment rate rose slightly to 4.4% as nearly half a million people joined the labor force. Economists expected the unemployment rate to hold at 4.3%.
There’s nothing here to suggest a major decline, but the numbers that come out over the next couple of months are going to be all over the place due to the shutdown. Interestingly, we are being told that the payroll number of October will never be released, while November’s will only be published after the Federal Reserve meeting on December 10th.
The Fed Sends Mixed Signals
If investors have been left scratching their heads about the catalysts behind this month’s losses, there is also growing confusion about what the Fed will do at its final meeting of the year in a couple of weeks. Up until today there was a consensus building that the Fed would sit tight. The odds of a quarter-point cut stood at roughly 25%. But on Friday morning, New York Federal Reserve President John Williams said he expects the central bank can lower its key interest rate from here as labor market weakness poses a bigger economic threat than higher inflation. His specific comment:
“I view monetary policy as being modestly restrictive, although somewhat less so than before our recent actions…Therefore, I still see room for a further adjustment in the near term to the target range for the federal funds rate to move the stance of policy closer to the range of neutral, thereby maintaining the balance between the achievement of our two goals.”
As you can see below, the odds of a cut spiked to 64% almost instantly.
Such moves so close to a meeting are historically unusual in the U.S. Usually, by now the Fed talking heads have communicated what’s going to happen so as not to surprise the markets. This time, they are sending very mixed messages. To quote Jim Bianco:
“So, Fed watching is now akin to whip counting, or tallying up the Voters’ public comments to see which view has a majority (7) votes. The current tally looks like this:
* 5 Voters have strongly signaled they do not want to cut rates next month (Barr, Musalem, Schmid, Goolsbee, Collins)
* 5 Voters signaled they want to cut rates (Miran, Waller, Bowman, Williams, Cook)
* 2 Voters are unknown (Powell and Jefferson)
If the Fed is truly becoming independent, then it should be a 7-5 vote … either way.”
If all of this feels a bit chaotic, that’s because it is. Markets are trying to price shifting narratives, missing economic data, and a Fed that may need a group chat to get on the same page. But underneath the noise, earnings remain strong, growth is still in place, and nothing so far points to 2025 turning into a repeat of more dramatic market moments in history.
These kinds of pullbacks are not only normal—they’re healthy. They reset expectations, shake out the speculation, and set the stage for the next leg forward. Our job is to stay grounded, keep perspective, and let the data—not the headlines—guide decisions.
If you’d like to talk through any of this or review your plan in light of current conditions, I’m always here.
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