November has been a huge month for U.S. stocks in almost every way.
After a “Red Sweep” by Republicans on November 5, markets have been filled with optimism about President-elect Donald Trump’s “America first” plan. This has helped major indexes like the S&P 500 and cryptocurrencies like bitcoin reach all-time highs.
Investors seem to be paying attention to Trump’s pro-business plan so far, which includes plans to cut taxes on corporations and loosen rules. Some people on Wall Street are worried about how Trump’s promised tariffs might affect the market. However, Danny Kirsch, head of options at Piper Sandler, told MarketWatch on Friday that the market seems to be seeing his trade threats as the first shot in a negotiation.
In the beginning of the week, that was the case. On Monday, Trump used Truth Social to warn to put tariffs on China, Mexico, and Canada. The Mexican peso (MXN) fell by 0.25% and the Canadian dollar (CAD) fell by 0.09%. Stocks in both countries also fell. But U.S. stocks mostly didn’t care.
Kirsch said, “This deregulation-America-first kind of policy is sort of hitting home for now at least.”
“It looks like it stirred up animal spirits again.”
At the beginning of the month, it looked like the rise was dying down. But Trump’s choice of Scott Bessent as his nominee for Treasury Secretary gave it a boost. The Congressional Budget Office says that Bessent has pushed for lowering the government budget deficit from 6.4% of the 2024 fiscal year to 3%.
The yield on the 10-year Treasury note TMUBMUSD10Y 4.175% has gone down since he was named Trump’s nominee. This is after a rise that was making some traders worried after the election.
At the end of November, Bitcoin was just below $100,000. At the same time, the S&P 500 SPX 0.56%, the Dow Jones Industrial Average DJIA 0.42%, and the Nasdaq Composite COMP 0.83% all had their best monthly gains in a year.
Dow Jones Market Data says that the S&P 500 and Dow both set new records at the end of November. These were the 53rd and 47th record closes of the year, respectively.
It was small and mid-cap stocks that did really well in November. Shares of regional banks KRE -0.31% did especially well. The popular Russell 2000 RUT 0.35% index of small-cap companies went up more than 10% in November, which was its best month since December 2023. The S&P Mid Cap 400 MID 0.07% also did very well, going up 8.7%, which was its best month since June 2023. Their rise in November helped close a performance gap that had been there all year with big-cap stocks.
A number of large-cap areas that are linked to the “Trump trade” also did very well. In November, both consumer discretionary stocks and financials in the S&P 500 went up by more than 10%. Even though the price of crude oil went down, energy stocks went up by more than 6%. Trump has chosen Chris Wright, who has worked in the fossil fuel industry for a long time, to be his energy secretary.
There were, of course, also winners. In November, healthcare stocks did the worst out of all sectors. When Trump said he would put forward Robert F. Kennedy Jr. as secretary of health and human services, shares fell sharply. The area was just barely in the black for the month by the time the market closed on Friday.
Even though it looked like some places were already getting better. The SPDR Biotech ETF XBI -0.38% has been going up for the past two weeks, which is what Kirsch said. This means that biotech stocks have recovered most of the losses they had in the beginning of November.
Also, stocks in clean energy have taken a beating. For example, the iShares Global Clean Energy ETF ICLN 0.32% has dropped more than 5%.
Many traders see many signs that the U.S. market is generally optimistic. For example, surveys show that a record number of people think stocks will go up over the next year, and the so-called put-call ratio in options contracts tied to the S&P 500 has gone down, which means that fewer bearish put options are being traded.
Kirsch told MarketWatch earlier this week that traders may be buying more protection against big changes in the market, but this is probably just a safety measure to keep their stock gains after a good year for markets.
But while stocks in the U.S. have gone through the roof, stocks in Europe and emerging countries like China FXI 0.00% and Mexico EWW 2.30% have had a tough time since Trump won the election.
Even though these are all signs of unbridled positivity, some people say the markets might not be seeing some risks.
