November is historically one of the strongest months of the year for the S&P 500 (SPY). However US stocks have been unseasonably weak this November. The S&P 500 is down about 3.5% on the month. The tech-heavy NASDAQ 100 (QQQ) is down about 6%. Naturally investors want to know what is driving this recent burst of weakness. Here are the leading forces and also what to expect as we head into the end of the year.
These are the Factors Pressuring U.S. Stocks
Profit taking: The S&P 500 gained more than 35% from the April to October, one of the best 6-month returns ever. After the big run, some of this recent weakness is being driven by profit taking.
Uncertainty on interest rates: The probability of the Federal Reserve cutting interest rates in December has recently declined. That lower probability was driven by delayed economic data from the government shutdown and lingering concerns about inflation.
Worry about high valuation: After the big run higher from April to October, U.S. stocks were richly valued by historical standards. This is particularly true for tech and AI stocks.
Despite the recent weakness, I remain optimistic on U.S. stocks. I expect this burst of weakness to be relatively short lived, and after that I expect a strong finish to the year. Here are the primary reasons I remain optimistic on U.S. stocks.
These are the Reasons to be Optimistic
Seasonal strength: Despite recent weakness in stocks, things can change quickly. November and December are both historically strong months for stocks and we still have six weeks for that cycle to play out.
Volatility is normal for S&P 500: The S&P 500 averages one 14% pullback per year and three 5% pullbacks per year. Weakness in stocks can be frustrating in the short run but in the long run its a normal feature of an otherwise healthy market.
US economy growing nicely: There have been many challenges in 2025 – tariffs, the government shutdown and a big decline in the S&P 500 early in the year. But through it all the U.S. economy has continued to expand. Q3 GDP, the broadest measure of economic growth, is now expected to come in at 4.2% by the Atlanta Fed. That would be the best growth rate since Q2 of 2018.
S&P 500 still has upward momentum: Despite the recent weakness U.S. stocks are still having a good year and still have solid upward momentum. The S&P 500 is up 12% on the year, the NASDAQ is up 14% and the Dow Jones Industrial Average is up 8%.
The big picture on the S&P 500: The S&P 500 has been unseasonably weak this November. However I view this as a normal correction in an otherwise healthy market. Looking forward I remain optimistic on U.S. stocks and I am expecting a strong close to the year.
Disclaimer: This report is for entertainment purposes only. Every investor should consult with an investment advisor before making investment decisions. The Vodicka Group, Inc. is not a broker/dealer. We do not receive compensation for mentioning stocks. At various times, the clients, publishers and employees of Vodicka Group, Inc., may buy or sell the securities discussed for purposes of investment or trading.
