Economic Update 11-24-2025

Economic data began to slowly flow again, following the record-long government shutdown, although scheduling remains delayed for a variety of releases. Last week’s highlights included the employment situation report for September coming in a bit stronger than expected, a rise in existing home sales, and improvement in several PMI surveys. However, consumer sentiment remained weak.

Equities fell back globally due to investor concerns about technology stock valuations, potential economic slowing, and an uncertain Fed rate path. Bonds fared well as interest rates fell back. Commodities fell across the board, especially in energy.

U.S. stocks fell back last week, with markets attempting to digest a variety of news. Earlier in the week, Home Depot provided some cautious comments about the health of the consumer, who appeared to be scaling back some home remodeling purchases in light of economic uncertainty, and reduced guidance. The Nvidia earnings report took over the focus by midweek, with Wed. results surpassing expectations, and management noting that AI chip sales were “off the charts,” although sentiment reversed downward along with some AI skepticism. Some of the early-week choppiness was reversed with a strong early gain on Thurs., with a better-than-expected (albeit old) September nonfarm payroll report, which eventually soured hopes downward when a no-cut December looked like more of a possible reality. Friday’s recovery was helped by New York Fed President Williams support of lower interest rates, which sharply raised market odds of a December cut after all back over 50%.

By sector, communications (led by Alphabet, with AI update news), as well as defensive groups health care and consumer staples saw gains, as would be expected in a poor week for stocks, while technology suffered the sharpest losses (nearly -5%, mostly due to Microsoft and Nvidia), followed by energy and consumer discretionary (Amazon and Home Depot).

Foreign stocks fell back across the board, in keeping with about a percent rise in the U.S. dollar. The U.K. fared slightly better than Europe, Japan, and emerging markets. While economic results were generally decent, sentiment was driven by the U.S.-themed AI story and chances for Fed rate cuts. The Japanese government approved a ~$135 bil. in fiscal stimulus, which included spending and tax breaks, although that was outweighed by some debt load concerns. EM stocks were mixed, with global trade and commodity focused China and Brazil down, as were South Korea and Taiwan, in keeping with U.S. technology stocks.

U.S. Treasury and investment-grade fixed income both gained last week, in keeping with flows away from risk and lower rates across the yield curve, while high yield and floating rate ended with flattish returns. Foreign bonds were mixed, in keeping with the stronger dollar.

Commodities fell back across the board last week, with energy performing worst. Crude oil prices fell by -4% last week to $58/barrel, in keeping with the above-referenced concerns around the economy.

Sources:  LSA Portfolio Analytics, American Association for Individual Investors (AAII), Associated Press, Barclays Capital, Bloomberg, Deutsche Bank, FactSet, Financial Times, Goldman Sachs, JPMorgan Asset Management, Kiplinger’s, Marketfield Asset Management, Minyanville, Morgan Stanley, MSCI, Morningstar, Northern Trust, Oppenheimer Funds, Payden & Rygel, PIMCO, Rafferty Capital Markets, LLC, Schroder’s, Standard & Poor’s, The Conference Board, Thomson Reuters, U.S. Bureau of Economic Analysis, U.S. Federal Reserve, Wells Capital Management, Yahoo!, Zacks Investment Research.  Index performance is shown as total return, which includes dividends, with the exception of MSCI-EM, which is quoted as price return/excluding dividends.  Performance for the MSCI-EAFE and MSCI-EM indexes is quoted in U.S. Dollar investor terms.

The information above has been obtained from sources considered reliable, but no representation is made as to its completeness, accuracy or timeliness.  All information and opinions expressed are subject to change without notice.  Information provided in this report is not intended to be, and should not be construed as, investment, legal or tax advice; and does not constitute an offer, or a solicitation of any offer, to buy or sell any security, investment or other product.