Mixed economic data, market volatility, and positive earnings.
Taking a closer look…
- US stocks have experienced elevated volatility recently. This volatility was likely driven by concerns regarding potential overvaluations in technology stocks along with uncertainty around a US Federal Reserve (Fed) rate cut in December. Nevertheless, US stocks have rallied nearly 35% since April,1 supported by investments in artificial intelligence (AI) and improved earnings after tariff-related concerns. The latest market turbulence appears to be a straightforward adjustment as short-term investors take profits and long-term investors rebalance their holdings.
- Official government data releases resumed, showing mixed signals following the government shutdown. On the downside, housing activity remained weak.2 On the upside, manufacturing picked up slightly and initial jobless claims stayed low.3 The data confirms Fidelity’s belief that the US economy remains in a maturing expansion, which typically involves both positive and negative signals, along with stock market growth amid periods of volatility.
- Speaking of government data, the Bureau of Labor Statistics (BLS) released its now stale September jobs report. This report showed a surprise increase of 119,000 jobs but an uptick in the unemployment rate to 4.4%.4 More importantly, the BLS cancelled the October jobs report because the government shutdown prevented the collection of key data. This report had been expected before the next Fed meeting on December 9. This announcement initially triggered a decline in market expectations for another rate cut this year, but the probability spiked higher on subsequent comments made by one Fed official.5
- Meanwhile, US companies continued to show strong year-over-year earnings growth, tracking around 13%. Should this trend continue through the end of the year, it would mark the second consecutive year of double-digit earnings growth for US stocks. Looking ahead, the consensus estimate for 2026 points to a 14% increase.6
Institutional Portfolio Manager, Strategic Advisers LLC
"The chances of another interest rate cut in December shot up at the end of November. The September jobs report included revisions that showed fewer jobs being added compared to this time last year. Additionally, the unemployment rate ticked up and wage growth wasn’t as strong as anticipated. All things considered, the Fed has compelling reasons to justify a cut in December."
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For over 30 years, Strategic Advisers and its dedicated group of seasoned investment professionals have helped clients reach their financial goals. Our team of portfolio managers, with specialized areas of focus in asset allocation and specific asset classes, along with our deep quantitative and fundamental research, drive our investment selection and risk management decisions on behalf of our clients.