Softens Labor Softens, AI Volatility Returns, and Global Policy Risks Grow
- QU Economics Research Team
- 1 day ago
- 6 min read
Weekly Market Commentary | Week of Nov 24th, 2025
A Recap of Economic and Financial Trends from the Prior Week
By: Khadija Farooqi, The Quinnipiac University Global Economics Research Team
Last Week in Review
U.S. data returned post-shutdown, showing a cooling labor market and softer consumer sentiment.
Markets weakened as AI-driven volatility resurfaced, even as corporate earnings remained solid.
Global trends remained mixed, with Europe showing resilience while the U.K. and Asia faced policy and growth headwinds.
Economic Recap
The release of delayed September Jobs Report offered a clearer picture of a labor market gradually losing momentum. The U.S. added 119,000 jobs in September, although updated figures showed the prior two months had 33,000 fewer jobs than initially reported. The unemployment rate also rose to 4.4%, a four-year high. Wage growth softened to 0.2% m/m and 3.8% y/y; evidence that labor demand is cooling. The Producer Price Index rose 0.3% in September, driven mainly by fuel costs, while the core PPI eased to a 2.6% y/y gain, its slowest pace since July 2024, suggesting firms are still mitigating the burden on consumers despite tariff-related cost pressures.
International data added to the theme of uneven global momentum. Eurozone activity remained resilient, with the HCOB composite PMI (Hamburg Commercial Bank Purchasing Managers' Index) at 52.4, supported by services strength, while U.K. inflation cooled to 3.6% in October even as Bank of England officials warned wage growth remains uncomfortably high. In Japan, newly approved fiscal stimulus totaling JPY 21.3 trillion and inflation holding at 3.0% y/y highlighted policymakers’ challenge in balancing household support with rising debt. China faced renewed market pressure as AI-driven equity gains faded and property-sector declines deepened. In Hungary, the central bank kept its policy rate at 6.50% as October inflation held at 4.3% and Q3 growth slowed to just 0.6% y/y, citing persistent weakness in industry and agriculture and the need to maintain tight monetary conditions until inflation returns to target.
Market Recap
Source: JPMorgan Asset Management, “Weekly Market Recap” (November 24, 2025). (Chart © JPMorgan Asset Management. Chart used under fair use for educational commentary by The Quinnipiac Global Economics Research Team.)
Equity markets ended the week lower as renewed volatility in the AI trade overshadowed otherwise strong corporate results. NVIDIA reported record quarterly revenue of $57 billion, including $51.2 billion from its data-center segment (+66% y/y), and issued an above-consensus outlook for the fourth quarter. Shares initially rose when trading opened on Thursday but finished the day 3% lower as investor worries about rising competition from Google, Meta, and other in-house chip developers resurfaced. Sentiment weakened further after reports that Google may begin selling its tensor processing units (TPUs), the company’s custom AI chips, directly to customers (potentially threatening up to 10% of NVIDIA’s annual revenue) and that Meta could spend billions on Google’s chips as early as 2027.
Broader market performance reflected this tech-driven weakness: the S&P 500 fell 1.9%, the Nasdaq Composite declined 2.7%, and the Dow Jones slipped 1.9% for the week, while small-caps were more resilient, with the Russell 2000 down 0.8%. Rate expectations also shaped sentiment (markets now assign a nearly 70% probability of a December Fed cut, up from 44% a week earlier) following dovish remarks by New York Fed President John Williams. In fixed income, falling Treasury yields supported positive total returns across government bonds, though municipal bonds lagged amid heavy supply; investment-grade corporates modestly underperformed Treasuries, and high yield softened alongside equity weakness.
Calendar Events
Economic Data:
Nov. 25 (Tues): U.S. Retail Sales (Sept., delayed); Producer Price Index (Sept., delayed); Core PPI y/y (2.9%); S&P Case-Shiller 20-City Home Price Index (Sept.); Consumer Confidence (Nov.)
Nov. 26 (Wed): Federal Reserve Beige Book
Major Corporate Earnings:
Nov. 25 (Tues): Dell Technologies (DELL) - Q3 2026 Earnings Announcement
Market Themes
The U.K. confronts a pivotal fiscal moment as Chancellor Rachel Reeves prepares to unveil an Autumn Budget shaped by tight fiscal rules, higher borrowing costs, and a widening £20 billion funding gap. Weeks of “kite-flying” (floating and retracting potential tax hikes” have unsettled investors, particularly after the government’s abrupt reversal on a possible income-tax increase, a move that contributed to volatility in gilt markets and raised questions about policy consistency. Reeves has pledged not to repeat last year’s £40 billion tax burden on businesses, shifting expectations toward measures such as freezing income-tax thresholds, higher council tax bands on expensive properties, adjustments to pension relief, and targeted levies like gambling or pay-per-mile EV taxes. With the Office for Budget Responsibility expected to downgrade growth forecasts for the next five years, Reeves faces pressure to demonstrate credibility while preserving political room to address cost-of-living concerns through energy-bill VAT cuts or welfare adjustments.
Investor sentiment remains cautious yet attentive: long-dated gilt yields have risen more than in any G7 economy except Japan since Labour (the U.K.’s center-left governing party) took office. For both U.S. and U.K. investors, the budget’s credibility matters: any signs of fiscal slippage risk pushing gilt yields higher, tightening financial conditions, and spilling over into global rate markets given the U.K.’s close links with U.S. and European asset flows. Against this backdrop, Wednesday’s budget will serve not only as a test of Reeves’ fiscal strategy but also as an early referendum on the stability and direction of Prime Minister Keir Starmer’s government.
**Note: Gilts are U.K. government bonds, the British equivalent of U.S. Treasuries. They are called “gilts” because early certificates had gilded (gold-edged) paper.
Walmart’s strong third-quarter results offered a clear signal that value-focused retail continues to outperform in a slowing economic environment. Revenue rose 5.8% to $179.5 billion, adjusted EPS increased 6.9% to $0.62, and e-commerce remained a standout with 27% growth alongside a 53% jump in advertising revenue. Broad-based strength, including 4.5% U.S. comp sales growth and an 10.8% increase in international sales, allowed Walmart to raise its full-year guidance, showing the company’s ability to attract budget-conscious consumers in a period marked by rising borrowing costs and cooling labor-market momentum. The results suggest that households are consolidating spending toward retailers offering price leadership, convenience, and omnichannel scale, reinforcing a sector-wide rotation toward large-format, value-driven platforms. For investors, Walmart’s performance highlights a key trend heading into year-end: even as discretionary categories weaken, resilient consumer demand is flowing to companies positioned at the intersection of affordability and digital reach.
Chart of the Week
Source: Apollo Academy, “Cheaper Now to Buy a New Home Than an Existing Home,” 2025. (Chart © Apollo Academy. Chart used under fair use for educational commentary by The Quinnipiac Global Economics Research Team.)
For the first time in more than fifty years, the price of a new single-family home has fallen below the average price of an existing home, an unusual inversion, reflecting the pressures shaping today’s housing market. As the chart shows, the ratio of new-to-existing home prices has slipped into negative territory, reflecting a sharp decline from the peak reached during the pandemic surge. New home prices are facing downward pressure as builders respond to strained affordability by producing smaller, lower-cost units and offering a wide range of incentives to attract buyers. In contrast, existing home prices remain elevated because supply is historically tight; many homeowners are reluctant to sell after locking in mortgage rates well below current levels, keeping inventory constrained and supporting price resilience. This divergence highlights how affordability challenges, supply dynamics, and rate lock-in continue to reshape the housing landscape heading into 2026.
Market Outlook
The macro backdrop continues to point toward a gradual cooling of U.S. economic momentum, with softer labor data, easing producer inflation, and still-fragile consumer sentiment shaping expectations for the months ahead. Markets now price nearly a 70% probability of a December Fed cut, yet policymakers remain divided, and the incoming data will be decisive in determining whether the Fed moves preemptively or waits for clearer confirmation of disinflation and labor-market slack. Treasury yields have drifted lower but remain volatile as investors reassess the balance between weakening growth and still-elevated shelter inflation, while corporate credit spreads remain tight despite rising recession chatter.
Additional Reading
Sources
J.P. Morgan Asset Management. “Weekly Market Recap.” J.P. Morgan Asset Management, https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/weekly-market-recap/
T. Rowe Price. “Global Markets Weekly Update.” T. Rowe Price Insights, https://www.troweprice.com/personal-investing/resources/insights/global-markets-weekly-update.html
BlackRock Investment Institute. “Weekly Investment Commentary: Keys to an EU Investment Renaissance.” BlackRock, 24 Nov. 2025, https://www.blackrock.com/corporate/literature/market-commentary/weekly-investment-commentary-en-us-20251124-keys-to-an-eu-investment-renaissance.pdf
J.P. Morgan Asset Management. “Economic Update.” J.P. Morgan Asset Management, https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/market-updates/economic-update/
Apollo Academy. “Cheaper Now to Buy a New Home Than an Existing Home.” Apollo Academy, https://www.apolloacademy.com/cheaper-now-to-buy-a-new-home-than-an-existing-home/\
Elias, Jennifer. “Nvidia Stock Falls after Report Says Google, Meta in Talks for Multibillion-Dollar AI Chip Deal.” Yahoo! Finance, 25 Nov. 2025, https://finance.yahoo.com/news/nvidia-stock-falls-after-report-says-google-meta-in-talks-for-multibillion-dollar-ai-chip-deal-143725770.html
Ahasan, Nazmul. “US Producer Price Index Rises on Higher Energy, Food Costs.” Financial Post, 25 Nov. 2025, https://financialpost.com/pmn/business-pmn/us-producer-price-index-rises-on-higher-energy-food-costs
Bruce, Andy. “UK’s Rachel Reeves Nears Moment of Truth with Tax-Heavy Budget.” Reuters, 25 Nov. 2025, https://www.reuters.com/business/finance/uks-rachel-reeves-nears-moment-truth-with-tax-heavy-budget-2025-11-25/