S&P 500 Winning Streak Stalls on Growing Uncertainty

Performance for Week Ending 11.7.2025:

The Dow Jones Industrial Average (Dow) fell 1.2 percent, the Standard & Poor’s 500 Index (S&P 500) lost 1.6 percent, and the Nasdaq Composite Index (Nasdaq) declined by 3.0 percent. Sector breadth was positive, with seven of the 11 S&P sector groups closing higher. The energy sector (1.5 percent) was the best performer, while technology (-4.2 percent) was the weakest.

*See below for Index Definitions

MARKET OBSERVATIONS: 11.3.2025  – 11.7.2025

The S&P 500 finished the week lower, breaking a three-week winning streak, reflecting technology sector valuation concerns, mixed signals on the labor markets, the ongoing government shutdown, and a dip in consumer sentiment, which fell to the lowest reading since June 2022. Negative market commentary from two investment bank CEOs added to the negative sentiment. Speaking at a conference in Hong Kong, Goldman Sachs CEO David Solomon warned of a significant equity market correction over the next one to two years. At the same conference, Morgan Stanley CEO Ted Pick said investors should “welcome the possibility that there would be drawdowns, 10–15 percent drawdowns, that are not driven by some sort of macro cliff effect."

Fed Speak—Mixed Signals: Federal Reserve (Fed) Governor Lisa Cook said she considers December's Fed meeting “live” for a potential rate cut but that she will make her decision based on information from a broad variety of sources between now and then. Chicago Fed President Austan Goolsbee said he’s in no hurry to cut interest rates again with inflation still too far above the central bank's 2 percent target. Fed Governor Stephen Miran restated the case for deep interest rate cuts that he has laid out since joining the central bank's Board of Governors in September and expanded his rationale to argue that buoyant stock and corporate credit markets are no reason to think monetary policy is too loose. Cleveland Fed President Beth Hammack said monetary policy should continue putting downward pressure on inflation, which she says is too high and remains a bigger risk for the U.S. central bank than labor market weakness. Fed Governor Michael Barr said policymakers still have work to do to get inflation down to the central bank’s 2 percent target and must be attentive to ensuring the labor market is solid.

Q3 Earnings: As of Nov. 7, 452 members of the S&P 500 have released fiscal third quarter results, with 82 percent beating expectations. Aggregate earnings for this group are up 11.8 percent from a year ago, solidly ahead of the 7.2 percent projected year-over-year growth rate at the start of earnings season. On the sector level, the biggest upside surprises came from industrials and healthcare. In terms of year-over-year growth, technology and financials continue to lead the pack.

Economic Roundup: According to the Institute for Supply Management (ISM), the U.S. manufacturing sector contracted at a faster rate in October—its eighth consecutive month of contraction—with the ISM Manufacturing PMI registering a reading of 48.7 (readings below 50 signal contraction), falling short of the consensus forecast calling for 49.5. At the same time, U.S. companies announced the most job cuts for any October in more than two decades as artificial intelligence (AI) reshapes industries and cost cutting accelerates, according to data from outplacement firm Challenger, Gray & Christmas. Companies announced 153,074 job cuts last month, almost triple the number for the same month last year, driven by the technology and warehousing sectors. It’s the most for any October since 2003, when the advent of cellphones was similarly disruptive, said Andy Challenger, the company’s chief revenue officer. A report from payroll processor ADP showed private sector employment in the United States rebounded by more than expected in October. ADP said private sector employment climbed by 42,000 jobs in October after slipping by a revised 29,000 jobs in September. Meanwhile, the ISM released a report showing U.S. service sector activity returned to expansion in the month of October. The ISM said its services PMI climbed to 52.4 in October after falling to 50.0 in September. Economists had expected the index to inch up to 50.8.

Market View: Despite recent market volatility, we continue to believe the macroeconomic environment remains supportive of additional upside over the remainder of the year and into 2026. The economy is expected to deliver positive growth with little chance of a near-term recession, earnings are growing, the Fed is cutting rates, fiscal policy is expected to become a tailwind in the quarters ahead, oil prices are near the lowest level in four years, AI capex spending in booming, and seasonals are favorable in the months ahead. While these things won’t necessarily prevent the market from occasional pullbacks, collectively they are expected to keep the current bull market intact.

The Week Ahead: The U.S. government shutdown continues to impact economic data releases, including this week’s release of the October CPI and October retail sales report. In earnings, with almost 90 percent of the S&P 500 members having already reported, the focus in will be on results from Cisco, Disney, and Applied Materials. About a dozen speeches by Fed members are scheduled throughout the week, including Fed Governor Christopher Waller on Wednesday. On Tuesday, the bond market will be closed in observance of the Veteran’s Day holiday.

— By Michael Schwager, Chief Market Strategist, Managing Director

Definitions

The Dow Jones Industrial Average is a price-weighted average of 30 blue-chip stocks that are generally defined as the leaders in their industry. It has been a widely followed indicator of the stock market since October 1, 1928.

Wilshire 5000 Total Market Index represents the broadest index for the U.S. equity market, measuring the performance of all U.S. equity securities with readily available price data. The index is comprised of virtually every stock that: the firm's headquarters are based in the U.S.; the stock is actively traded on a U.S. exchange; the stock has widely available pricing information (this disqualifies bulletin board, or over-the-counter stocks). The index is market cap weighted, meaning that the firms with the highest market value account for a larger portion of the index.

Standard and Poor's 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

The Nasdaq Composite Index is a broad-based capitalization-weighted index of stocks in all three Nasdaq tiers: Global Select, Global Market and Capital Market. The index was developed with a base level of 100 as of February 5, 1971.

This material contains opinions of the author, but not necessarily those of Guggenheim Partners, LLC or its subsidiaries. The opinions contained herein are subject to change without notice. Forward looking statements, estimates, and certain information contained herein are based upon proprietary and non-proprietary research and other sources. Information contained herein has been obtained from sources believed to be reliable, but are not assured as to accuracy. Past performance is not indicative of future results. There is neither representation nor warranty as to the current accuracy of, nor liability for, decisions based on such information. No part of this material may be reproduced or referred to in any form, without express written permission of Guggenheim Partners, LLC.