After November’s unease, calm returns to U.S. markets
Home / After November’s unease, calm returns to U.S. markets
By Thierry Hasse, Chief Investment Officer, Elevage Partners
After a brief period of anxiety in November, calm is returning to U.S. financial markets. Volatility has eased, investor expectations have narrowed and markets appear to be settling into a more familiar rhythm as the year draws to a close.
Volatility Retreats across U.S. Financial Markets
Chief Investment Officer Thierry Hasse
After reaching an all-time high in late October, U.S. equities experienced a modest pullback. The S&P 500 declined roughly 5%, falling from approximately 6,900 to 6,500 over several weeks as technology stocks faced selling pressure and investors reassessed the uncertain outlook for monetary policy.
Following several months of strong gains, this pause was a natural breather. Not surprisingly, the areas most affected were those with the highest expectations. Richly valued technology companies, particularly within the crowded artificial intelligence trade, and firms with exposure to cryptocurrency markets bore the brunt of the sell-off.
Notably, the volatility passed almost as quickly as it arrived. Wall Street’s “fear gauge,” the VIX, has fallen back toward year-to-date lows, while the MOVE Index, a measure of volatility in U.S. Treasury markets, has touched its lowest level since early 2021 (Source: Bloomberg News).
For the most recent week, the S&P 500 finished modestly higher by 0.3%. That subdued result follows a strong 5.2% rally during Thanksgiving week, a reminder that investors continue to align with a familiar market mantra: don’t fight the Fed, and don’t fight the tape (Source: CNBC).
An Economy That No Longer Surprises Investors?
Part of the renewed calm may reflect an economy that, at least for now, is behaving largely as expected. The recent U.S. government shutdown delayed the release of several economic reports, contributing to the perception that little has changed beneath the surface, particularly as businesses and consumers continue adapting to the evolving tariff regime.
On Friday (Dec. 5), the Commerce Department released the delayed Personal Consumption Expenditures (PCE) Price Index for September, data more than two months old. Both the headline and core PCE showed an annual inflation rate of 2.8%, signaling inflation that remains elevated but steady. Importantly, the report aligned closely with Wall Street economists’ expectations and suggested that prices have remained relatively stable despite tariffs and continued consumer spending.
While inflation remains above the Federal Reserve’s 2% target, recent data has reinforced a sense of predictability. With inflation pressures holding steady, investor attention has increasingly shifted toward signs of labor-market softening.
According to ADP Research, U.S. companies have reduced payrolls at the fastest pace since early 2023. As of early December, Challenger, Gray & Christmas reported that U.S. employers announced more than 1.1 million job cuts in 2025, the highest total since the pandemic year of 2020. This round is driven largely by corporate restructuring and growing adoption of artificial intelligence.
Across the economy, a “slow-hire, slow-fire” environment now appears to be the prevailing condition.
Cautious Optimism for U.S. Equities in 2026
Against the backdrop of a slowing but resilient economy, inflation that appears sticky yet contained, and a Federal Reserve signaling support as labor conditions soften, it is not surprising that many Wall Street strategists are optimistic about U.S. equities heading into 2026.
The average year-end 2026 target for the S&P 500 currently sits near 7,600, implying an increase of roughly 11% from current levels. Notably, no major firm is forecasting a negative year (Source: CNBC).
Much of this optimism rests on the continued earnings power of U.S. corporations. Consensus forecasts project S&P 500 earnings growth of approximately 14%, supported by revenue growth and a strong focus on efficiency. Companies continue to defend profit margins through restructuring, cost discipline, and increased investment in artificial intelligence to support productivity gains.
Equally important, last spring’s nearly 20% “mini-crash” following the widely discussed “Liberation Day” policy shock pushed many investors to the sidelines and left a lasting sense of caution. Markets driven less by euphoria, and more by disciplined, selective participation, have historically produced more sustainable advances over time.
Looking Ahead, the Final Act of 2025
This week is likely to mark one of the final defining moments of the year. The Federal Reserve holds its last Federal Open Market Committee meeting of 2025 on Dec. 9–10. Market participants broadly expect another quarter-point rate cut, continuing the easing cycle that began in September and October, and bringing the federal funds rate into a range of approximately 3.75% to 4%.
Policy makers, however, remain unusually divided, a rare dynamic for an institution that typically operates by consensus. The debate centers on whether to prioritize support for a softening labor market or maintain a more restrictive stance to ensure inflation continues moving toward the Fed’s 2% target.
During the news conference following the decision, Fed Chairman Jerome Powell is likely to face pointed questions, not only about monetary policy, but also about leadership uncertainty as speculation continues around future Federal Reserve appointments. When the Fed’s dual mandates — price stability and maximum employment — move in opposing directions, clean solutions are rare.
As always, markets will respond not just to what the Fed decides, but to how investors interpret what comes next.
Important Disclosure(s)
The information contained herein represents the views of Elevage Partners at a specific point in time and is based on information believed to be reliable. No representation or warranty is made concerning the accuracy of any data compiled herein In addition, there can be no guarantee that any projection, forecast, or opinion in these materials will be realized. Any statement non-factual in nature constitutes only current opinion which is subject to change. These materials are provided for informational purposes only and do not constitute investment advice. Any reference to a security listed herein does not constitute a recommendation to buy, sell, or hold such security. Past performance is no guarantee of future results. The historical returns of any securities and/or sectors mentioned in this commentary are not necessarily indicative of their future performance.
After November’s unease, calm returns to U.S. markets
Home / After November’s unease, calm returns to U.S. markets
By Thierry Hasse, Chief Investment Officer, Elevage Partners
After a brief period of anxiety in November, calm is returning to U.S. financial markets. Volatility has eased, investor expectations have narrowed and markets appear to be settling into a more familiar rhythm as the year draws to a close.
Volatility Retreats across U.S. Financial Markets
After reaching an all-time high in late October, U.S. equities experienced a modest pullback. The S&P 500 declined roughly 5%, falling from approximately 6,900 to 6,500 over several weeks as technology stocks faced selling pressure and investors reassessed the uncertain outlook for monetary policy.
Following several months of strong gains, this pause was a natural breather. Not surprisingly, the areas most affected were those with the highest expectations. Richly valued technology companies, particularly within the crowded artificial intelligence trade, and firms with exposure to cryptocurrency markets bore the brunt of the sell-off.
Notably, the volatility passed almost as quickly as it arrived. Wall Street’s “fear gauge,” the VIX, has fallen back toward year-to-date lows, while the MOVE Index, a measure of volatility in U.S. Treasury markets, has touched its lowest level since early 2021 (Source: Bloomberg News).
For the most recent week, the S&P 500 finished modestly higher by 0.3%. That subdued result follows a strong 5.2% rally during Thanksgiving week, a reminder that investors continue to align with a familiar market mantra: don’t fight the Fed, and don’t fight the tape (Source: CNBC).
An Economy That No Longer Surprises Investors?
Part of the renewed calm may reflect an economy that, at least for now, is behaving largely as expected. The recent U.S. government shutdown delayed the release of several economic reports, contributing to the perception that little has changed beneath the surface, particularly as businesses and consumers continue adapting to the evolving tariff regime.
On Friday (Dec. 5), the Commerce Department released the delayed Personal Consumption Expenditures (PCE) Price Index for September, data more than two months old. Both the headline and core PCE showed an annual inflation rate of 2.8%, signaling inflation that remains elevated but steady. Importantly, the report aligned closely with Wall Street economists’ expectations and suggested that prices have remained relatively stable despite tariffs and continued consumer spending.
While inflation remains above the Federal Reserve’s 2% target, recent data has reinforced a sense of predictability. With inflation pressures holding steady, investor attention has increasingly shifted toward signs of labor-market softening.
According to ADP Research, U.S. companies have reduced payrolls at the fastest pace since early 2023. As of early December, Challenger, Gray & Christmas reported that U.S. employers announced more than 1.1 million job cuts in 2025, the highest total since the pandemic year of 2020. This round is driven largely by corporate restructuring and growing adoption of artificial intelligence.
Across the economy, a “slow-hire, slow-fire” environment now appears to be the prevailing condition.
Cautious Optimism for U.S. Equities in 2026
Against the backdrop of a slowing but resilient economy, inflation that appears sticky yet contained, and a Federal Reserve signaling support as labor conditions soften, it is not surprising that many Wall Street strategists are optimistic about U.S. equities heading into 2026.
The average year-end 2026 target for the S&P 500 currently sits near 7,600, implying an increase of roughly 11% from current levels. Notably, no major firm is forecasting a negative year (Source: CNBC).
Much of this optimism rests on the continued earnings power of U.S. corporations. Consensus forecasts project S&P 500 earnings growth of approximately 14%, supported by revenue growth and a strong focus on efficiency. Companies continue to defend profit margins through restructuring, cost discipline, and increased investment in artificial intelligence to support productivity gains.
Equally important, last spring’s nearly 20% “mini-crash” following the widely discussed “Liberation Day” policy shock pushed many investors to the sidelines and left a lasting sense of caution. Markets driven less by euphoria, and more by disciplined, selective participation, have historically produced more sustainable advances over time.
Looking Ahead, the Final Act of 2025
This week is likely to mark one of the final defining moments of the year. The Federal Reserve holds its last Federal Open Market Committee meeting of 2025 on Dec. 9–10. Market participants broadly expect another quarter-point rate cut, continuing the easing cycle that began in September and October, and bringing the federal funds rate into a range of approximately 3.75% to 4%.
Policy makers, however, remain unusually divided, a rare dynamic for an institution that typically operates by consensus. The debate centers on whether to prioritize support for a softening labor market or maintain a more restrictive stance to ensure inflation continues moving toward the Fed’s 2% target.
During the news conference following the decision, Fed Chairman Jerome Powell is likely to face pointed questions, not only about monetary policy, but also about leadership uncertainty as speculation continues around future Federal Reserve appointments. When the Fed’s dual mandates — price stability and maximum employment — move in opposing directions, clean solutions are rare.
As always, markets will respond not just to what the Fed decides, but to how investors interpret what comes next.