Why the Stock Market Is Struggling This November

November is usually a strong month for stocks based on the S&P 500’s historical patterns, but this year has been anything but typical.

Equities have been extremely volatile, swinging sharply within the same trading day as investors alternated between selling on fears of lofty valuations—especially in AI-related names—and buying back in when sentiment briefly improved.

Rising concerns over interest rates and how they influence the debt-fueled AI spending boom have only added to the tension.

Nvidia’s strong earnings last week offered a short-lived boost, but the optimism faded as attention returned to what the Federal Reserve might do at its December 9–10 meeting.

Momentum picked up again on Monday, extending Friday’s rally after New York Fed President John Williams signaled support for additional rate cuts.

“It’s becoming increasingly clear how interconnected everything is,” said Andrew Briggs of the Plaza Advisory Group. “Right now, it feels like there are two economies: AI—and everything else.”

Fed Takes Center Stage

San Francisco Fed President Mary Daly also voiced support for a December rate cut, citing labor-market risks.

Tech stocks surged: the Nasdaq jumped 2.7%, the S&P 500 gained 1.6%, and the Dow rose 0.4%. Gold extended its massive 56% year-to-date gain. Bitcoin continued to struggle, and Treasury yields slid—helping lower borrowing costs and giving rate-sensitive stocks and AI names room to rebound.

Viktor Shvets of Macquarie Capital said investors have two choices: “day trade in chaos” or invest in sectors with strong growth prospects. Despite recent volatility, he expects the Fed to cut rates soon, arguing that policymakers can’t allow a broad decline in asset prices because of the tight link between markets, spending, and economic growth.

The odds of a December rate cut climbed back to above 80% on Monday, up from 42% a week earlier. Big tech helped lead gains: Tesla rallied nearly 7%, Alphabet rose more than 6%, and Amazon added 2.5%.

A Tough Month for Tech

Despite November’s reputation for strong performance—the S&P 500 has averaged a 2.2% gain over the past 25 years—the index is still down nearly 2% heading into the final week. It’s on track for its worst November since 2008.

This comes even with Alphabet up more than 13% this month and Apple up 2%. Many other major AI stocks, however, are posting losses.

“The market is showing some AI fatigue,” said Donald Calcagni, CIO at Mercer Advisors. Nvidia’s rapid earnings growth has helped support valuations, but uncertainty around the Fed’s cutting cycle threatens that foundation.

If rate cuts pause or fall short of expectations, “that undercuts the assumption that debt will keep getting cheaper,” he said.

A standard 10% market pullback could also hit high-income consumers who have fueled spending thanks to the tech-led boom. A slowdown in AI could trickle down into restaurants and entertainment—industries that rely heavily on lower-income workers, who are already burdened by rising costs and slower wage growth.

“The bull market needs a liquidity tailwind—whether from central banks or fiscal support—to continue,” said Briggs. Outside the AI sector, he added, much of the economy is under pressure. But the Fed also must be careful: cut too aggressively, and inflation risks roaring back.