November Market Review

December 1, 2025

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Well, I'm glad that month is over. The S&P 500 was basically by the end of November (up +0.2%.).  But dont let that fool you.  It was a volatile month -- especially for the AI-related stocks.

Below you can see performance as the month moved along.   It started out strong, but it cracked sharply mid-month.  The drop was driven by:

(1) AI “bubble” fears and

(2) Fed rate cut uncertainty.  

Below is performance by sector. You can see that tech stocks took the brunt of the pain.  Software and AI stocks got pummeled.  October saw a dramatic run up in many of the large AI-related stocks. Many of those gains reversed in November.

Healthcare and the smaller sectors rallied.  Within healthcare, the performance was driven by pharma stocks.  

Among the top ten stocks, the divergence was even greater.   This was a true “stock picker’s month”.   See chart below.  Eli Lilly, Google, and Broadcom rallied, and they offset the pain in Tesla and Nvidia.

Eli Lilly rose strongly due to a “better than feared” negotiation with the government on pricing of obesity drugs.  Lilly became the first healthcare stock to cross the “$1 trillion” barrier.  It replaced Walmart in the top ten largest stocks.  Welcome to the big boy club, Lilly!

The top ten stocks in the S&P 500 now account for an eye-popping 41% of the total index.  The top 100 account for 75%.

Year-to-date, the S&P 500 is up 17.6%.  The tech heavy Nasdaq 100 is up 21.6%.  Our AI basket is up 40.6%.   The average S&P 500 stock is up 10.7% this year.

That’s the dirty little secret of index funds – they are momentum funds.  By that, I mean, the winners become larger positions, and the losers become smaller.  As such, in bull markets, the indexes will outperform the straight average performance of the individual components.  Put simply, the index is “buying the winners, and selling the losers”.