Will The Santa Rally Continue?

Analyzing the markets with Richie Naso, a Wall Street veteran of over 40 years and former member of the NYSE.

• DJIA 52-wk: +6.25% | YTD: +12.16% | Wkly: +3.18%
• S&P 500 52-wk: +13.54% | YTD: +16.45% | Wkly: +3.73%
• NASDAQ 52-wk: +21.58% | YTD: +21.00% | Wkly: +4.91%
• Russell 2000 Index 52-wk: +2.70% | YTD: +12.12% | Wkly: +5.52%

• Tech-Led Rally & Rate-Cut Optimism

The week opened with a strong rally on Monday: the S&P 500 rose ~1.5%, and Nasdaq jumped nearly 2.7%. That surge was led by gains in big tech/AI-related stocks, as investors priced in a potential interest-rate cut by the Federal Reserve in December. AP News+2Financial Times+2

Gains in major tech names — especially firms connected to AI and semiconductors — helped push broader market sentiment higher. Financial Times+1

• Rotation Beyond Big Tech

While tech led much of the rally, smaller-cap stocks (as shown by the Russell 2000) and many non-tech sectors participated — suggesting a broader appetite for risk, not just a narrow tech rebound. WRAL News+1

Many sectors ended the week in the green, indicating broad-based gains rather than a narrow concentration. Finviz+1

• Macro & Fed Signals

Rate-cut odds rose significantly, boosting investor confidence, especially among growth and high-valuation stocks which are highly rate-sensitive. Reuters+1

Mixed economic data and lingering uncertainty around inflation and employment added volatility — but the optimistic rate outlook seemed to dominate sentiment for now. Interactive Brokers+1

⚠️ Risks & What to Watch

AI-concentration risk: Some analysts warn that the market’s rebound is too dependent on a handful of “AI / Big Tech” firms. If execution disappoints or valuations get choppy, the rally could falter. The Washington Post+1

Economic uncertainty: Despite gains, signs of labor-market slack and mixed data could keep markets on edge. Interactive Brokers+1

Fed uncertainty: While rate-cut bets helped lift sentiment, any unexpected hawkish tone from the Fed could quickly reverse gains — especially for growth stocks.

EMBATTLED A.I. STOCKS:

Recovered somewhat last week, but many still had a bruising month. Oracle’s stock lost more than 20 percent, after investors became uneasy over the company’s debt-financed spending on A.I. data centers. Nvidia, the multitrillion - dollar giant that has propelled the market higher in recent year, fell more thanb 12 percent.

Other markets are also showing signs or worry. Even after rallying in recent days, Bitcoin remains nearly 30 percent below its peak in October. The price of gold, typically a haven for investors during times of turmoil, gained more that 5 percent in November.

The volatility and mixed signals leave investors in a tricky spot, mindful of the potential for the rally to sputter in the final month of the year.

Black Friday Is More Important for Stock Markets Than Ever. This Is Why and 4 Other Things to Know Today.

Investors still digesting their turkey dinners have one more reason to be thankful: a great week for the stock market amid a brutal month.

But those considering adding stocks to their shopping cart on Black Friday may want to pause. The holiday itself could help decide the market’s next move.

Black Friday is always watched by investors, because the shopping event is one of the year’s best insights into consumer behavior that does not come from a government survey.

As a source of alternative data, Black Friday has perhaps never been this important. The 42-day government shutdown wreaked havoc on scheduled releases of official economic data—figures crucial for the Federal Reserve’s interest-rate decisions and catalysts for investor behavior.

While the latest insight into retail sales was released this week, the figures were from September and outdated because of the shutdown. With sparse data on tap before the Fed’s next rate decision in December, the central bank is likely to scrutinize Black Friday data more than ever. Investors should, too.

Black Friday has historically focused on discretionary goods (think TVs) but a slowing economy could lead shoppers to go for basics instead. If consumer spending is concentrated on groceries, it would be a bad sign for the economy but lend weight to the chance the Fed cuts borrowing costs in December.

Surveys also suggest discretionary spending may fall in step with income brackets. This would add support to the idea that the U.S. is in a K-shaped recovery—with the highest-income earners bouncing back much faster than others—which has implications for overall economic resilience.

All this means blowout sales on Black Friday may be more than meet the eye, which gives food for thought as market chatter turns to the prospect of a so-called Santa Rally into the end of the year.

Dupes’ Are Just Latest Woe for Home Furnishing Stocks

Key Points

About This Summary

Williams-Sonoma is suing Quince over the sale of “dupes,” or similar-looking, cheaper versions of its home goods, highlighting a growing trend.

Home furnishings and improvement retailers face headwinds including decreased demand postpandemic, inflation, and a stagnant housing market.

Most home goods stocks are down in 2025, with RH sinking 60% and Williams-Sonoma down 2%, while Wayfair surged 150%.

In one of my friend’s first apartments after college she had an imitation Noguchi coffee table we called the Fauxguchi. She got hers from a flea market, but it has become ever easier to buy knockoff furniture and home goods online.

That is at the center of a lawsuit that retailer Williams-Sonoma is bringing against digitally native brand Quince: The former says the latter is selling dupes —or inferior products that bear a suspiciously similar appearance to their own but sell for much less. Quince, which is privately held, didn’t return requests for comment.

In one sense it’s no surprise that this issue is cropping up in the home goods sphere given that dupes have become increasingly common across a variety of categories online, as Barron’s reported last year. Yet they are just the latest in a series of headwinds that has hurt the furnishings and home improvement industry, as evidenced by cratering stock prices across the category.

Home improvement and furnishings retailers surged during the stay-at-home days of the pandemic, but that boom time didn’t last. People don’t need to replace many kinds of home goods frequently, and inflation makes it even less likely for them to spend on redecorating or remodeling. A stagnant housing market plagued by unaffordability has further depressed demand, as moving is a big reason why consumers spend on this category.

Those factors have weighed on the stocks this year, as a quick tour of the industry shows. While the S&P 500 has soared double-digits again in 2025, Williams-Sonoma is down about 2% since the start of the year. RH has sunk roughly 60% year to date; Lovesac has tumbled more than 40%; and even after a recent pop La-Z-Boy is off about 10%. Arhaus is the only stock in the black, but it is badly trailing the broader market, up just 6%. The same holds for the major home improvement retailers Home Depot and Lowe’s, both of which are firmly in the red for 2025.

This lackluster performance comes despite a massive winnowing of the field in recent years, as chains including Noble House, Mitchell Gold, Klaussner Home Furnishings, and Z Gallerie have closed up shop. The company formerly known as Overstock purchased the intellectual property of Bed Bath and Beyond after its bankruptcy, and is slightly ahead of the S&P 500, although it sells apparel and accessories as well.

In fact, Wayfair, another digitally native brand, is the only real outperformer of the group, surging 150% since the start of the year.

In short, Williams-Sonoma and others can hardly afford the incursion of cheaper rivals at a time when inflation-weary consumers are laser focused on value and getting more comfortable with buying even big-ticket home items online.

Relief may not be on the way for upper-end retailers. Any effective housing emergency plan has to address the high cost of buying a home and the continuing shortage of housing stock. Even ongoing interest rate cuts don’t guarantee lower mortgage rates.

That means dupes are just one of many issues facing home furnishing and improvement stocks that may leave investors feeling like suckers.

For the coming weeks, keep an eye on:

Economic releases (jobs, inflation, consumer spending) these could influence rate expectations and market tone

Tech earnings and AI-sector performance (since much of the rally hinges on those companies)

Market breadth — whether gains expand beyond large-cap tech into mid- and small-caps

MONDAY, DEC 1

• 9:45 AM — S&P Final U.S. Manufacturing PMI
• 10:00 AM — ISM Manufacturing
• 8:00 PM — Fed Chair Jerome Powell Speaks

FRIDAY, DEC 5

• 8:30 AM — Personal Income (delayed report)
• 8:30 AM — Personal Spending (delayed report)
• 8:30 AM — PCE Index (delayed report)
• 8:30 AM — PCE (Year-over-Year)
• 8:30 AM — Core PCE Index (delayed report) - pt.
• 8:30 AM — Core PCE (Year-over-Year)
• 10:00 AM — Consumer Sentiment (Prelim) – Dec
• 3:00 PM — Consumer Credit – Oct

This is going to be a tricky week. Some of the important data that will be released is from September as well as November. I expect plenty of volatility. I’m focusing on the A.I. stocks and the breadth of the market. All in all, I believe this rally will continue.

REMEMBER: Be patient, react and don’t predict.

— Richie

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