top of page

Clever.

Clever.

Clever.

Why November’s Dip May Set the Stage for a Year-End Rally

  • Writer: Anthony Walters
    Anthony Walters
  • Nov 24
  • 3 min read

After a strong year for equities, global markets entered November with some consolidation. The Nasdaq 100 ETF and S&P 500 ETF, which had surged on AI optimism and resilient earnings, have experienced a healthy pullback. While recent developments introduced uncertainty, underlying fundamentals and structural growth drivers suggest reasons for cautious optimism as we look ahead.


Key Drivers of the Pullback.


  1. Cooling AI Momentum and Valuation Reassessment  Mega-cap tech stocks, central to 2025’s rally, have faced renewed scrutiny as investors evaluated whether massive AI-related capital expenditures would deliver near-term returns. High-profile bearish bets on Nvidia and Palantir have added to the recalibration of expectations.  

  2. Government Shutdown and Data Delays  The longest US government shutdown in history has postponed important economic data releases, leaving the Federal Reserve without full visibility on inflation and employment trends. This uncertainty has tempered confidence in imminent rate cuts.  

  3. Inflation Surprise and Cautious Fed Tone  Recent CPI (Consumer Price Index) data showed inflation remaining sticky, prompting Fed Chair Powell to signal that rates may stay elevated longer than expected. Growth stocks, sensitive to rate expectations, were most affected.  

  4. Macro and Geopolitical Headwinds  Lingering trade tensions and tariff-related stagflation risks have weighed on sentiment. Some analysts have stated that tariffs have slowed growth and kept inflation persistent, adding to caution.  


Global Perspective.


The moderation has not been confined to US markets. European and Asian equities have also eased as investors globally reassessed risk appetite. In Europe, concerns over slowing industrial output and policy uncertainty added pressure, while Asian markets, closely tied to global tech supply chains, mirrored US trends. These moves highlight interconnected markets adjusting after a period of exuberance.

4


Reasons for Optimism.


  • Strong Earnings Momentum: S&P 500 companies posted an 11% year-on-year earnings increase in Q3, beating expectations across tech, financials, and consumer sectors.


  • Structural AI Growth: BlackRock projects $5 trillion in AI infrastructure spending through to 2030, signalling long-term productivity gains despite short-term volatility.


  • Valuations Turning Attractive: Morningstar estimates US equities now trade at a 2% discount to fair value, creating opportunities for disciplined investors.


  • Policy Support Ahead: As inflation moderates, the Fed is expected to resume rate cuts in 2026. The end of the government shutdown restores clarity on economic data, reducing uncertainty.


  • Historical Resilience and Seasonal Tailwinds: December has historically been one of the strongest months for equities:

    • S&P 500 rises 73% of the time in December, its highest win rate of any month.

    • Average December return: +1.40%, often supported by the “Santa Claus Rally.”

    • The Russell 2000 posts gains 83% of the time, with an average return of +2.80%, the best of any month. 


The recent pullback reflects a natural pause after an AI-driven surge, compounded by macro uncertainty. However, strong earnings, structural growth drivers, and improving policy clarity, combined with historically favourable December seasonality, point to a constructive outlook for 2026 and beyond.


Irrespective, the CleverEngine continues to actively monitor market conditions, supported by the Market Shift Detection System (MSDS). With enhanced responsiveness and adaptive capabilities, CleverEngine is positioned to act decisively should volatility persist or new trends emerge, ensuring portfolios remain aligned with evolving opportunities and risks.



Sources

“AI Stocks Face Reality Check as Valuations Cool,” Michael Burry, Reuters, Nov 6, 2025 

“Government Shutdown Delays Key Economic Data,” Lucia Mutikani, Reuters, Nov 8, 2025 

“Inflation Surprise Keeps Fed Hawkish,” Howard Schneider, Reuters, Nov 12, 2025 

“Tariffs and Stagflation Risks Persist,” David Lawder, Reuters, Nov 14, 2025 

“Global Markets Mirror US Weakness,” Marc Jones, Reuters, Nov 15, 2025 

“Earnings Beat Expectations Despite Volatility,” Yahoo Finance, Nov 10, 2025 

“AI Spending to Hit $5 Trillion by 2030,” BlackRock Insights, Nov 11, 2025 

“Valuations Attractive Post-Pullback,” Morningstar, Nov 13, 2025 

“Here’s What History Says About Stock Market Performance in December,” Mark Hulbert, MarketWatch, Nov 30, 2022 


bottom of page