Market Insights Recap — Week of November 24, 2025

Hello, I'm Steve Orr, Chief Investment Officer for Texas Capital’s Private Bank.

Better than you think, indigestion and coming soon. What do they mean for our portfolios? And what should we be thinking about?

A healthy economy means healthy corporate earnings. Healthy earnings lead to higher stock prices. Two big drivers of the economy: consumer spending and company investment plans. Consumers continue to spend this year, although much of the spending the last six months came from the higher income groups. Consumers and lower income groups, they're stretched a bit.

Now folks are willing to spend when they have a job, and September's employment report that came out last week showed a nice improvement in new jobs. The BLS reported 119,000 net new jobs for the month, well above the expected 51,000. It's only one data point. It's delayed, but it's an indicator that the summer's job slowdown may be behind us. Jobless claims are a preview of changes in unemployment and other than a recent spike in the D.C. area, they're not showing a rise overall in unemployment. Private surveys like the S&P Purchasing Managers Indices show services and manufacturing at worst are flat over the last six months, but most areas are expanding. The Cleveland Fed's median CPI inflation measure, it's creeped higher to 3.5%. Inflation remains a problem. 

A company investment plans, though, appear to be the same or better for '26 as they were in 2025. The AI buildout, it has to throttle back at some point, but it looks healthy well into next year. The One Big Beautiful Bill Act is going to have a number of CapEx-friendly deductions and tax breaks that kick in the next year. February consumer relief in the form of tax breaks, they hit too. So all will help the economy transition from a virus shutdown era helicopter money to a more stable, private spending-led economy. Most of our economic indicators are at least light green, and the fourth quarter looks good despite the government shutdown. The economy is in better shape than the noise would have you believe.

It's Thanksgiving week. So we'll use a food analogy for the stock market. Pass the TUMS; there's been a bit of indigestion over the last three weeks. In most years, there's a brief consolidation period around Halloween after earnings season. Some of that indigestion is tax loss selling, others just pulling liquidity out for the holidays. We don't mind a pause in the rally now and then. Stocks have had a great run since Liberation Day last April. The S&P 500 is off 5% from its last all-time high in October. The Magnificent Seven have led the way, slipping nearly 8.5%. Bitcoin and its crypto allies have taken the real hit. They're off over 30% since mid-October.

Now we're not concerned with the levels of the stock indices; we're monitoring breath and other heartbeat measures. The economy and underlying fundamentals are sound. The technical action and sentiment in the leaders, big tech and AI names, they're giving the rest of the stock market a bit of a black eye at the moment. Remember, attitudes follow price and sentiment is just kind of taking a hit right now. But regardless, the U.S. and global markets remain in uptrends. So keep your periscope up and your wallet closed for a few more days. There's going to be a better entry point in the days ahead. 

And looking ahead to 2026, I mentioned the One Big Beautiful tax changes coming. Pencil in two quarters of 2% GDP growth with acceleration in the second half. I do think the Fed cuts short rates a quarter point one more time, more likely at January. But long-term rates stay about where they are, frustrating the administration's attempts to get housing going. The Federal budget deficit should come down thanks to a full year of moderate tariffs, and midterm election years usually see stock market corrections mid-year.

We would not be surprised by a several-months slide in the midst of an improving economy and continued earnings growth and more importantly, a continued long-term bull market. So we're going to stand aside here for a couple of weeks. Let things shake out. Happy Thanksgiving; 'til next time.