Macro & Market Recap: A Thanksgiving-Fueled Rally

The financial markets experienced a significant surge over the shortened Thanksgiving trading week, largely driven by a combination of positive momentum and evolving expectations regarding Federal Reserve policy. The key theme was a decisive shift away from the bearish sentiment that had permeated the earlier part of the month, resulting in a robust, broad-based rally across major U.S. equity indices.

U.S. Equity Markets: Best Thanksgiving Week Since 2008

U.S. stocks staged a powerful comeback, marking one of the strongest Thanksgiving week performances since 2008.¹  The gains were widespread, with the S&P 500 Index, Dow Jones Industrial Average (DJIA), and Nasdaq Composite all posting impressive weekly returns. This rally helped to solidify the market's return to risk-on positioning as the calendar turns to December.

• Broad Strength: All three major indices recorded their fifth consecutive day of gains leading into the shortened Friday session. The S&P 500 gained approximately $3.7% for the holiday week, while the DJIA was up 3.2.^.2
• Technology Momentum: The technology-heavy Nasdaq Composite outperformed, surging nearly 5.2% for the week, led by strong gains in key semiconductor and AI-related stocks. This rebound came despite the index snapping its seven-month winning streak in November, a signal that volatility remains, but investor appetite for growth assets is resilient.
• Santa Claus Rally?: Historically, strong performance during Thanksgiving week has often foreshadowed positive returns in December. For investors, this sets an encouraging, albeit not guaranteed, tone for the final month of the year.³

Fixed Income & Monetary Policy: Easing Rate Cut Expectations

The bond market experienced notable movement, reflecting a sharp increase in the probability of a forthcoming interest rate cut by the Fed. The yield on the benchmark 10-year Treasury note moved lower on improved risk sentiment, falling from its earlier highs.⁴

• Dovish Shift in Rate Futures: Market pricing for the Fed’s next policy meeting reflected a significant increase in the probability of a rate cut, which now stands at 89%  This shift suggests that investors are increasingly interpreting recent economic signals, including some softer economic data, including  September’s retail sales and the Fed's Beige Book commentary, as a sign that the Fed’s tightening cycle has peaked and that accommodation may be on the horizon.
• The Fed's Beige Book: The Federal Reserve's latest Beige Book report, a summary of economic conditions across its twelve districts, indicated that economic activity was "little changed," noting a softening labor market and further decline in overall consumer spending (though high-end retail remained resilient).⁵  This commentary reinforced the view that the Fed's dual mandate—price stability and maximum employment—is becoming more balanced, potentially leaning toward supporting growth.
• Treasury Yields: The 10-year Treasury yield finished the week lower, reflecting the improved sentiment and increased expectations for a rate cut. Bond prices and yields move inversely; therefore, falling yields indicate rising bond prices and heightened investor demand.

Consumer & Economic Data: Retail Strength and Mixed Signals

The shortened week also provided a focus on the U.S. consumer, particularly around the crucial Black Friday and Cyber Monday holiday shopping period.

• Initial Retail Sales Data: While overall retail sales figures from earlier periods showed a slowing pace of consumer spending, the preliminary data for Black Friday indicated a record-setting start to the holiday shopping season, particularly in online spending.⁶  This highlights a key market disconnect while consumer sentiment remains subdued, actual spending behavior—especially among higher-income households—has shown resilience.
• Jobless Claims: Initial U.S. unemployment claims fell to their lowest level in several months, indicating a job market that is moderating but not collapsing.^.7  This mixed signal is precisely what the Fed is watching: a cooling labor market (to temper wage-driven inflation) without a sharp rise in joblessness (to avoid a hard landing).  However, the November ADP employment number came out yesterday, showing a loss of 31,000 jobs, showing a possible cooling of the labor market, but without having much effect on the stock market.

While the rally is encouraging, we must remember that equities are near all-time highs, and key data releases in the coming weeks, particularly on inflation and jobs, will either solidify or challenge the market’s newly formed conviction on a dovish Fed pivot.

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Footnotes

1. Bloomberg Markets, 11/28/25

2. YCharts, 11/28/25

3. Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/DGS10

4. YCharts, Bloomberg Markets, 11/28/25

5. The Federal Reserve's Beige Book, published Wednesday, November 26, 2025, https://www.atlantafed.org/economy-matters/regional-economics/beige-book/2025/11/26/beige-book-southeast-economy-little-changed-in-recent-weeks.

6. AP News, Shoppers spend Billions on Black Friday, 11/29/25, https://apnews.com/article/black-friday-shopping-spending-7f8b8e9244171333bfa6a7e8a91bffd0

7. YCharts, 11/20/25

Researched and compiled with the assistance of Gemini Pro. This newsletter represents our opined general assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future performance or results. The opinions and statements expressed are intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities or investment strategies to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. This material may contain estimates and forward-looking statements, which may include forecasts and do not represent a guarantee of future performance. This information is not intended to be complete or exhaustive and no representations or warranties, either express or implied, are made regarding the accuracy or completeness of the information contained herein. The opinions expressed are as of December 3, 2025, and are subject to change without notice. Investing involves risks. Past performance is not a reliable indicator of current or future results, and index returns do not account for fees. It is not possible to invest directly in an index.

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