Wall Street traders are likely breathing a sigh of relief as November, one of the weakest since the 2008 financial crisis, draws to a close. The market is now looking towards December, a historically strong month, to provide the necessary spark to reignite a tired tech rally and reset the bull market for 2026.
A Brutal November for US Stocks
The month of November delivered a significant blow to investor confidence. The S&P 500 index fell nearly 3.5% since the start of the month, while the tech-heavy Nasdaq Composite experienced a steeper tumble of 6.1%. The market's fear gauge, the VIX, surged dramatically by nearly 35%, indicating heightened volatility and uncertainty. Even the cryptocurrency market felt the pressure, with Bitcoin plunging more than 20% during this period.
This widespread decline occurred despite a blockbuster third-quarter earnings report from chipmaker Nvidia. Its robust demand outlook, which should have calmed fears of an artificial-intelligence investment bubble, failed to provide more than a few hours of positive momentum to the broader markets.
Experts Weigh In: Correction or Something Deeper?
Market strategists see the November slump as a necessary, if painful, market correction. Lori Calvasina, head of U.S. equity strategy at RBC Capital Markets, stated that a short-term pullback was long overdue. She noted that investors are questioning whether financial markets have run too far too fast since the rally began in early April.
Ed Yardeni, president of Yardeni Research, offered a nuanced perspective. He observed that the S&P 500 has shifted to a slower track compared to its rapid gains from April to October. Importantly, he suggested that while the AI bubble isn't bursting, it is losing some air, which he views as a positive development for the long-term sustainability of the bull market that started in October 2022.
The December Hope: A Seasonal Rebound
All eyes are now on December, which has a history of delivering solid gains. This seasonal strength, combined with the notable November retrenchment, sets the stage for a potential rebound. Data from Bank of America provides a compelling historical precedent: on each occasion a 10-month rally of 10% or more was interrupted by a November pullback, the S&P 500 gained an average of around 4.1% in December.
David Laut, CIO at Kerux Financial, believes the November sell-off has paved the way for a market rebound in December. He argues that many of November's fears, particularly regarding AI and a weakening job market, have not materialized, indicating a traditional pullback rather than the start of a deeper correction.
The upcoming Federal Reserve meeting in early December is a critical event that could either support this optimistic view or test the market's bullish conviction. A potential Fed rate cut, coupled with the central bank's plan to stop selling bonds from its massive balance sheet starting December 1, is expected to support market liquidity and boost appetite for risk assets.
Louis Navellier of Navellier Calculated Investing summed up the sentiment, noting that while it's hard to call a bottom, a Fed rate cut in December could likely trigger a material rebound. As the holiday season begins, Wall Street is counting on a December bump to erase the memories of a painful November and set a positive tone for the new year.
