December Update: Markets Keep Moving, Even When the News Feels Confusing
November was a mixed month for investors. Stock prices moved up and down, mostly because people were trying to guess what the Federal Reserve (the Fed) will do next with interest rates. At the same time, the big excitement around Artificial Intelligence (AI) didn’t disappear—but investors started paying closer attention to which AI companies are truly making money.
If you’re focused on long-term goals like retirement planning, months like this are a good reminder: short-term market noise is normal, and having a clear, well-built portfolio matters more than ever.
What Happened in November?
Stocks: A Quiet Month on the Surface, With Big Differences Underneath
The S&P 500 (the index that tracks the 500 largest companies in the U.S.) ended November slightly positive. But not all parts of the market did the same thing.
- Large “growth” companies—especially big tech and AI-related stocks—fell during the month.
- Large “value” companies (often more traditional businesses) rose.
- Smaller company stocks also did a bit better than big tech.
One standout was Health Care, which rose strongly and was the best-performing sector in the S&P 500. Several other sectors also beat the overall market, even while Technology lagged.
Even when the market looks flat, different areas can perform very differently. That’s why diversification is a key part of good portfolio management.
Bonds: A Good Month as Rates Drifted Lower
Bonds were up in November. Why? Because interest rates ended the month lower than they started, even though rates jumped around a lot during the month.
When interest rates fall, bond prices usually rise. This helped broad bond indexes and both investment-grade and high-yield bonds.
Bonds can still play an important role in retirement planning, especially when markets are unpredictable.
International Markets: Mixed, But Still Strong This Year
Stocks outside the U.S. were mixed in November. Developed markets were slightly up, while emerging markets were down. Even so, both have done very well overall this year and are still ahead of U.S. stocks in 2025.
Investors often neglect international markets, but having some international exposure is an important part of a well-diversified portfolio and may help long-term results, depending on your goals and risk comfort.
Why the Fed Drove Markets This Month
The Market’s “Tug-of-War” Over Interest Rates
Most of the market’s ups and downs in November came from one question:
Will the Fed cut interest rates in December?
Early in the month, Fed Chair Jerome Powell said a December cut was not guaranteed. That made investors less confident, and stock prices drifted lower. Later in the month, new inflation and jobs data made a rate cut seem more likely again, and stocks recovered.
But what investors care about isn’t just whether rates drop or rise. They care about what the Fed’s decision signals about the future of the economy. A rate cut would suggest the Fed believes inflation is cooling and the economy can keep growing without slipping into recession.
Markets don’t like uncertainty. When expectations change fast, prices can swing—even if nothing “bad” has actually happened.
AI Stocks: The Story Isn’t Over—It’s Just Changing
Investors Are Getting More Selective
AI is still a big force in the market. Many of the biggest companies in the S&P 500 are tied to AI in some way. But investors are starting to ask tougher questions like:
- Are companies spending too much on AI tools and data centers?
- Will that spending turn into real profits?
- Are some AI stocks priced too high for what they’re actually earning today?
Because of those concerns, some major AI-related stocks dropped sharply during the month and weighed down the broader market.
The AI trend is moving into a new phase. Instead of rewarding every company connected to AI, investors are starting to reward the ones that can show real results—meaning revenue growth, better productivity, and profits that justify the hype.
AI may still be a long-term growth engine, but picking the right exposure is becoming more important than just “owning anything AI.”
What This Means for You
If you’re a client, you may not follow markets every day—and you don’t need to. But here’s what matters:
- Short-term swings are normal. Markets always react to headlines.
- A well-diversified portfolio helps smooth the ride.
- Your plan should be built around your life goals—not around what the Fed says next week.
This is especially true if you’re focused on retirement planning, living off your investments, or making sure your portfolio can support you for the long run. Solid portfolio management isn’t about guessing the next move—it’s about building something that works across many market environments.
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Important disclosures:
This commentary is general market information, not personalized advice. Markets can change quickly, and past results don’t guarantee future performance. Indexes are unmanaged and can’t be invested in directly.