Market Update
November was defined by the ending of the historic 43-day government shutdown, which finally ended on November 12. While the reopening brought a sense of relief to the markets, it left investors and the Federal Reserve in a unique period of "data darkness." The Bureau of Labor Statistics confirmed that the official October Jobs and CPI (inflation) reports were effectively cancelled or delayed until mid-December. This has left market participants relying heavily on private data to gauge the economy's health. In the absence of official government numbers, private reports like ADP’s employment figures signaled a cooling labor market, with private payrolls adding just 42,000 jobs in October and layoffs hitting a 22-year high for the month.
What factors will impact investing in 2026?
LPL Financial is preparing to release their Outlook for 2026 and the research team has given a preview of some of the topics they feel will drive markets in the coming year.
- No Recession Expected: LPL anticipates the economy will avoid contraction in 2026, providing a supportive backdrop for equities.
- Strong Earnings Growth: Double-digit earnings growth is expected to continue, supported by technological innovation. This growth is crucial to justify current elevated stock valuations (S&P 500 P/E over 22x).
- Massive AI Investment: Major tech companies (hyperscalers) are projected to spend $520 billion on AI infrastructure in 2026—a potential 30% increase from 2025—fueling productivity and profit margins.
- Midterm Elections: With all 435 House seats and one-third of the Senate up for grabs, political uncertainty may rise. Midterm years historically see higher volatility (average drawdown of 17.5%) followed by strong post-election rebounds.
- Resurgent M&A Activity: Dealmaking is heating up due to deregulation, rate cuts, and AI demand. This creates opportunities in merger arbitrage and private equity.
To read the full preview from the LPL Research team, click here.
Market Recap
The S&P 500 and Dow kept their momentum alive in November, notching a seventh straight month of positive returns. In contrast, the tech-heavy Nasdaq pulled back, bringing its multi-month winning streak to a close.
- The S&P 500 was up slightly at 0.13% for the month. This brings its YTD return to 16.45%.
- The Nasdaq Composite Index posting a loss of -1.51%. The YTD return is at 21%.
- The Dow Jones Industrial Average (DJIA) also saw its seventh straight month of gains, adding 0.32%. The YTD return is at 12.16%.
As always, if you have questions about how the economy may impact your investments, please don’t hesitate to reach out to us.
Sources:
https://www.morningstar.com/indexes/spi/spx/performance
https://www.morningstar.com/indexes/dji/!dji/performance
https://www.morningstar.com/indexes/xnas/@cco/performance
https://www.bls.gov/bls/2025-lapse-revised-release-dates.htm