When the Markets Feel a Little Stranger
If you somehow missed it, one of my favorite shows, Stranger Things (Netflix’s 80s retro sci-fi hit) returned for its fifth season over Thanksgiving. The series takes the seemingly ordinary town of Hawkins and reminds you it’s anything but.
Cue the flickering lights, lurking monsters, a band of kids (who somehow carry the fate of the entire town on their handlebars) and one telekinetic orphan who saves the day more often than the adults would like to admit. The monsters all come from this creepy mirror world called the Upside Down, it looks like ours if you turned the lights out and added creatures with too many teeth.
(Have I lost you yet? Hope not. This will all make some sense in a minute...)
As a kid from the 80s who may have geeked out on the same sci-fi classics that inspired the show, it all feels familiar and new at the same time. Kind of like the market which, in November, carried a similar vibe.
While nothing ended up being disastrous, plenty felt off. AI stocks stumbled. Fed expectations spun around more than a possessed compass. Bitcoin dropped faster than a Hawkins middle schooler hitting a homemade ramp on a BMX bike. And thanks to the shutdown, key economic data just…didn’t show up. For a few days in the middle of the month, you could almost feel investors glancing around wondering if those monsters from the Upside Down were scratching at our doors.
Then, just like in the show, everything snapped back to normal. The S&P ended the month basically flat, bonds delivered a solid gain and the deeper story stayed intact (instead of telekinesis, we used the power of earnings growth to save the day in our story.) The world wasn’t ending. It just got a little strange for a moment.
Wait, Haven’t We Seen This Before?
While the mid-month selloff hit almost everything at once (knocking the major indices around like a Demogorgon chasing one of our Hawkins heroes) the market ended up outsmarting the monster by the finale. The S&P 500 still managed a 0.1% gain, the Dow added 0.3% while the Nasdaq slipped 1.5%. Year-to-date, returns remain strong with the S&P up 16.4% and the Nasdaq up 21%. The VIX (a market volatility indicator) spiked above 26 during the worst of the wobble but settled back to 16 by month-end.
AI stocks took the biggest punch. Concerns about spending, margins and the sustainability of the boom led to their worst week since April. Yet, just beneath the surface (very on-theme) fundamentals stayed solid. Nvidia and others posted strong revenue and earnings and several of the Magnificent 7 rebounded as the dust cleared.
Bitcoin’s wild arc continued. After rallying sharply earlier in the year, it fell more than 30 percent from its highs and closed November down about 17%. If we’re looking for a Stranger Things analogy, think of it as the flickering light in the hallway – bright one second, dim and unsettling the next.
Meanwhile, bonds delivered some of the most reliable performance of the month. The Bloomberg U.S. Aggregate Bond Index rose 0.6% and is now up 7.5% this year, its best run since 2020. The 10-year Treasury briefly dipped below 4% before ending at 4.02%. Quiet, steady and a welcome offset to equity volatility.
A Few Questions I’ve Been Getting Lately:
What caused the mid-month volatility?
A mix of AI anxiety, shifting expectations around Fed cuts and the usual headline frenzy plus there was likely some profit taking. This was the sixth 5% pullback for the S&P 500 this year - a number that feels dramatic but sits right near the historical average. In other words, Hawkins-level weirdness on the surface, everyday market behavior underneath.
What’s the story with the shutdown and missing data?
The longest shutdown in history ended after 43 days, but it delayed critical economic reports. The September jobs report finally came out in November and showed 119,000 new jobs with unemployment at 4.4% - still low by historical standards. There is no October report because surveys simply weren’t conducted. The government is only funded through January so we’ll get more headline noise soon.
Despite all this, markets looked through the disruption. Just like the show, not every eerie moment signals an actual monster.
Will the Fed cut rates in December?
Expectations swung around all month. At one point, the probability of a December cut dropped sharply then rebounded once rates stabilized. Consumer sentiment has slipped, but spending and corporate revenues haven’t followed. Markets still expect a cut this month then one or two more in the spring or early summer.
Still, will our old monstrous nemesis - inflation - rise from the ashes to haunt us again? Guess we’ll have to wait until next season (or the next CPI report) to find out.
So Where Does This Leave Us?
If October felt like déjà vu, November felt like déjà vu with a Stranger Things twist. Markets flickered, headlines got dramatic, AI stocks had a mid-season crisis and half the data vanished into the bureaucratic Upside Down. Yet once the noise cleared, the story was familiar.
Volatility is normal. Pullbacks are normal. Headlines amplify both.
As we head into the final stretch of the year, the playbook remains the same. Stay patient. Stay diversified. Keep your focus on long-term goals. Progress rarely arrives in a straight line, but it does tend to show up for those who don’t get spooked by every flickering light.
Until next time, take good care.
