Markets Still Strong Amid Tech Bubble Worries and Shutdown Uncertainty
As we step into November — with leaves falling, daylight savings behind us, and the holidays just around the corner — it’s natural to think of slowing down. But apparently, no one told the stock market that it’s time to hibernate.
October marked the sixth straight month of growth for all three major market indexes. Year-to-date, the S&P 500 is up by 16.3%, the Dow Jones Industrial Average by 11.8% and the Nasdaq by 22.9%.1 The S&P and Nasdaq have made the most gains because both are heavily weighted with tech companies.
In fact, in recent weeks, there have been several days when the Dow slipped a bit while the S&P 500 held steady and the Nasdaq jumped higher. What’s more, most stocks within the S&P actually declined in October, even as those in the tech sector — especially companies focused on AI — pushed the index as a whole higher for the month.2
This lack of parity in the markets is a growing concern for some analysts, as it naturally raises the question: “Is this another tech bubble?” Some are starting to wonder if this looks like 1999 all over again—or perhaps more like 1997 or 1998, when the market still had room to run before the dot-com bubble finally burst. The reality, of course, is that no one can say for sure.
But the good news for most of you is that you’re not heavily tied to those high-flying tech stocks, anyway. So, while you might be missing out on a little of that upside growth, you also don’t have to worry about what happens if those stocks suddenly come back down.
The Fed vs. The Shutdown
As you probably know, the Federal Reserve lowered short-term interest rates again in late October, marking the Fed’s second rate cut in two months. More than half of Wall Street expects another cut in December.
The Fed also announced they are ending “quantitative tightening,” which basically means it is stopping the process of selling off government bonds. That’s important because it should help more effectively bring long-term interest rates down alongside short-term rates. In short, that’s good news for borrowers, and it could also give the slowing economy a needed boost. Mortgage rates, for example, have already come down from around 7% to about 6.3%.
Interestingly, the Fed’s decision to keep lowering rates is not necessarily a reaction to bad news; it is a reaction to uncertainty. Because of the ongoing government shutdown, a lot of the usual economic data the Fed relies on — such as jobs reports and GDP numbers — haven’t been available. They’re flying blind without their usual instruments, so they’re choosing to be cautious to help make sure the economy keeps moving in the right direction.
So far, the data we do have suggests the economy is still growing, just at a slower pace, as I noted. That’s okay, though, because these cautionary moves by the Fed could set us up for a stable stretch ahead.
Your Portfolios
For those of you focused on income-first, growth second, this continues to be a good environment. As of the end of October, our typical portfolio built mostly around bonds and bond-like instruments is up about 5% for the year on average, depending on your individual holdings. That’s right on target with our long-term goals.
Once again, the current environment gives us a great reminder of the difference between known and unknown returns in an investment strategy. The interest and dividend income you earn from your portfolio is known — it’s steady and it’s yours once you receive it. On the flipside, capital gains from growth investments are unknown — they can look great one month and disappear the next. That’s why focusing on generating reliable income, rather than chasing market highs, continues to make so much sense for investors in or nearing retirement, especially in unpredictable times like these.
With that in mind, and as we approach the Thanksgiving season, I just want to say how grateful I am for the trust you place in our team. And, as always, if you have any questions or concerns at all about your investments, please don’t hesitate to reach out. We’re always happy to talk through things to help ensure you feel comfortable with your allocation.
Have a great November and a Happy Thanksgiving — although, if you’ve been in any department stores lately, you know it’s really Christmas season already!
Sources:
1https://finance.yahoo.com/news/major-us-stock-indexes-fared-203201798.html
2https://www.cnbc.com/2025/11/02/stock-market-today-live-updates.html
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