Welcome back to our November recap. We hope you all had a wonderful Thanksgiving holiday with friends and family. Hunter and I were fortunate to spend some time with my family in New Jersey, and Joel hosted some close friends and family here in CO.
In this month’s recap, we will cover market performance for November and then dive into our topic of the month – The K-Shaped Economy. We’ll get into what it is, who developed the term, and why it’s such a widely used term today.
The Markets in November
November was a mixed month for equities, with modest gains in some indices and notable declines in others. The Russell 2000 led the pack with a nearly 1% return, signaling resilience among small-cap stocks despite ongoing macroeconomic uncertainty. The MSCI EAFE Index (developed international markets) and the Dow Jones also posted positive returns of 0.64% and 0.48%, respectively, supported by steady earnings and optimism around global growth stabilization.
In contrast, large-cap growth and international emerging markets struggled. The S&P 500 eked out a small gain of 0.25%, while the Nasdaq fell almost 1.5%, reflecting profit-taking in technology stocks after strong prior-month rallies. The MSCI Emerging Markets Index was the weakest performer, dropping nearly 2.4% amid geopolitical tensions and currency volatility, weighing on investor sentiment. Early-month volatility gave way to a late-month rebound, driven by expectations of continued monetary easing and improving inflation trends.
Overall, November highlighted a rotation toward value and smaller-cap names, while growth sectors faced headwinds. Global markets remain sensitive to policy signals and economic data, setting the stage for a closely watched year-end.
US Equity Sectors
Looking at sector performance, November brought a clear standout in Health Care, which surged almost 9.3%, making it the top-performing sector by a wide margin. This strength was driven by strong quarterly earnings from major pharmaceutical and biotech companies, as well as renewed investor interest in defensive sectors amid ongoing macroeconomic uncertainty. Materials also posted a solid gain of 4.35%, supported by rising commodity prices and optimism around global manufacturing demand, which helped offset earlier weakness in industrial activity.
On the other end of the spectrum, Technology was the biggest laggard, falling 4.81% after several months of strong gains. Profit-taking in mega-cap tech names and cautious guidance from semiconductor firms weighed heavily on the sector. Consumer Discretionary also slipped 1.45%, reflecting softer retail sales and concerns about holiday spending trends. Overall, November’s sector performance highlighted a rotation away from growth-oriented sectors toward defensive and cyclical plays, as investors balanced optimism about rate cuts with caution around earnings and global demand.
Bond Performance
Bond markets posted solid gains in November, driven by falling yields and renewed expectations for monetary easing. U.S. intermediate-term bonds led performance, reflecting strong demand for duration as rate volatility eased. Shorter-duration U.S. bonds delivered more modest returns, as their limited sensitivity to rate movements tempered upside potential.
International bonds, however, lagged behind, amid divergent global rate dynamics and currency adjustments. Overall, November reinforced the advantage of U.S. exposure—particularly intermediate-term allocations—while shorter-maturities and global bonds faced headwinds, underscoring a domestic tilt as the most constructive positioning for fixed-income investors.
Topic of the Month –The K-Shaped Economy
A K-shaped economy describes a recovery or growth pattern where different segments of society move in opposite directions after an economic shock. The term comes from the shape of the letter “K”: the upward-sloping arm represents wealthier households and sectors that rebound strongly, while the downward-sloping arm reflects lower-income groups and struggling industries that continue to decline. Unlike a V-shaped or U-shaped recovery, which implies broad-based improvement, a K-shaped pattern highlights deepening inequality—some people and businesses thrive while others stagnate or fall behind.
The phrase was popularized by economist Peter Atwater during the COVID-19 pandemic in 2020. Atwater observed that while white-collar professionals and asset owners benefited from rising stock prices and remote work, many service-sector workers faced layoffs and prolonged hardship. Economists had debated other shapes—V, U, L—but Atwater argued that “K” best captured the divergent paths of households and industries during that period.
The term is widely used today because it explains the current economic environment: overall growth looks solid, yet hiring is uneven, inflation persists, and consumer confidence is fragile. Wealthier Americans continue to spend and accumulate assets, while lower-income households struggle with rising costs and slower wage growth. This bifurcation affects everything from retail strategies to monetary policy, making “K-shaped economy” a shorthand for the growing divide in income, spending, and opportunity.
Closing Comments
That’s a wrap for November! We appreciate the opportunity to be part of your financial journey. As winter approaches, we hope you’re finding time to enjoy the season, whether that means cozy evenings indoors or festive holiday activities, knowing we’re here to keep your plan moving forward.
See you next month!
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