Often quoted in major national media, Adam is a Chartered Financial Analyst (CFA®), a CERTIFIED FINANCIAL PLANNER™ (CFP®), and has been included on the Forbes NextGen Best-in-State Wealth Advisors 2019 list. He is a member of the CFA Society of Los Angeles and the CFA Institute. Adam helps establish asset allocation strategy as a member of the EP Wealth Investment Committee, which supports all EP Wealth Advisors and their clients. The Committee’s top-down approach to portfolio construction begins with an outlook on the economy’s likely direction, followed by the implications for different economic sectors and asset classes. This culminates in strategic selection of the individual stocks, bonds, mutual funds or other investments deemed most appropriate for each individual client’s portfolio.
Market Update: Holiday Spending, Consumer Health, and What’s Driving Markets
December 1, 2025
As we enter the final stretch of the year, all eyes remain on the strength of the consumer and the path of interest rates. The holiday shopping season kicked off with encouraging—but nuanced—data, offering insight into how Americans are navigating a still-uncertain economic landscape.
Holiday Spending: Solid Headlines, Softer Reality
Cyber Monday is expected to deliver another record year, with Adobe Analytics forecasting more than $14 billion in online sales. This follows a better-than-expected 4% rise in Black Friday spending, according to MasterCard SpendingPulse.
Looking at the full November–December period, the National Retail Federation projects total holiday spending to exceed $1 trillion, also up about 4% from last year. However, these figures are not adjusted for inflation. With inflation running near 3%, real spending growth is closer to 1%, reflecting modest but still positive momentum.
This matters because consumer spending is the engine of the U.S. economy. While higher-income households have generally been more insulated—benefiting from rising investment portfolios and locked-in low mortgage rates—lower-income households continue to struggle more acutely with the cost of everyday essentials. Monitoring the durability of consumer demand remains essential as we head into the year-end.
Market Rebound Fueled by Rate-Cut Expectations
Just before Thanksgiving, the S&P 500 experienced a roughly 5% pullback from its all-time highs. But the dip was short-lived. Investors quickly stepped back in, helping markets rebound to near-record levels by the end of last week.
What has changed? Not economic data. Instead, investor sentiment improved sharply as expectations strengthened for a Federal Reserve interest rate cut at next week’s meeting. Current market pricing reflects an almost 100% probability of a rate cut.
In November, the S&P 500’s movement closely mirrored shifting expectations around Fed policy, suggesting that rate outlook—not fundamentals—has been the primary market driver.
Looking Ahead: Light Data, Seasonal Tailwinds
Because recent government shutdowns delayed several economic releases, policymakers and investors alike are operating with less data than usual. This reduces the likelihood of any major surprises that could disrupt the Fed’s expected path.
As for the remainder of 2025, it’s worth noting that December is historically the strongest month of the year for markets, delivering an average return of about 1.3% for the S&P 500. While much of the good news may already be priced in, history suggests the final weeks of the year often offer a constructive backdrop.
If you have questions about what this environment means for your financial plan, please reach out to your advisor. We look forward to bringing more insights next week as the Federal Reserve’s December meeting approaches.
EP Wealth Advisors offers a comprehensive range of services to help you invest with greater insight, as well as develop a holistic wealth management strategy. To discuss your finances and investment goals, we invite you to contact one of our advisors.
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Video Summary:
Well, volatility is back. Over the last week, we've seen equities we've seen crypto pull back from their recent highs. What's driving this? There are really a few things. One of them is the fact that expectations for the next Fed cut. At their next meeting in December, they've actually fallen, so about a month ago, basically a hundred percent chance of the Fed cutting at that meeting, as we look at the Fed fund's futures, and the market is pricing below a 40% chance of a Fed rate cut.
And that's really because we've heard from a lot of voting members and not voting members and non-voting members of the Federal Reserve talk more recently about how they're. A little bit more focused on lingering inflationary pressures than they are the weakening jobs market. And so that could be spoiling plans for a lot of investors who were really prepared and hoping for additional monetary policy, accommodation, and support from the Fed.
I think a lot of this could also be the fact that we're seeing for the first time a healthy dose of speculation when it comes to the artificial intelligence trade. We've actually seen a lot of these high-flying stocks pull back in recent weeks. It really started with Meta or Facebook. They're down, a little bit more than 20% from their all-time high.
And I think this is broadly a trade where a lot of investors are starting to question all the money that's going into the artificial intelligence build-out. We've seen a number of these companies, these hyperscalers, have committed to spending over a hundred billion dollars per year on the AI buildout.
And the question is. When will they start to reap this? The benefits? When will they actually be able to show the benefits of all of this investment to investors, if at all? And so I think that has a lot of investors worried, especially as we know that their valuations have soared in recent years. So.
For us. I, we, we don't think that this is an AI bubble that's in the process of bursting here, but I think it's a great reminder of why we diversify client portfolios. We've been saying for a long time now that you can play this AI theme and have exposure to these names, and many of them are great companies.
They're the ones that are printing cash and some of the most profitable companies out there. But you need to be mindful of how much risk you are taking on and how much these companies are accounting for your overall equity exposure in your portfolios, especially as they continue to outperform their relative weight within your portfolio, and become quite sizable.
And so it needs to be managed appropriately. And so we diversify our client portfolios. And let's remember, even if you are. Even if you are, do you still want to play this artificial intelligence theme? There are ways to do it without getting over your skis and overallocating to information technology and these tech-adjacent types of sectors.
In the most recent earnings season, we're actually wrapping up the third quarter earnings season, but we saw over 60% of companies in the s and p 500 actually referenced artificial intelligence in their earnings calls. And as you look. At the underlying sectors of the market. We actually saw that it wasn't just technology, it wasn't just communications.
There are a lot of other sectors in the S&P 500 that are looking for ways to utilize artificial intelligence and reap some type of productivity gains and efficiencies out of this new technology. So the way that we look at it in our portfolios is you can have exposure to these, these high-flying names.
But do it within reason. And maybe we are moving towards this next phase of artificial intelligence, where it's going to be less about these, these high-flying names, these hyperscalers that are really focused on building out the infrastructure and looking for these companies that will ultimately benefit and be able to apply this technology.
So there are a couple of ways to look at this when it comes to using AI and investing in AI in your own portfolio. As we look to what's on tap this week, we're going to be finishing up earnings season. So Nvidia, sticking with that artificial intelligence theme, is set a report on Wednesday. We're also going to hear from a number of retailers, specifically Target, Walmart, and Home Depot.
That's really important because we know that. The, the, , this e economy is driven by consumer spending and this consumption. We know that confidence has been dented because of lingering inflationary pressures and a weakening jobs market. So when we hear from these companies, it really provides us with a look into how the consumer is actually doing.
And so it'll be a really informative week for us when it comes to the economy. And outside of earnings on Thursday, we're going to get the September jobs number. So this number, we, yes, we are in November. So this number is actually coming about seven weeks late. So better late than never. It's coming late because of the government shutdown.
Now that the. Government is back open. We're going to get this number, so it's not going to be very timely, but it will give us a look at how the labor market was looking back in September. We'll eventually get that October jobs number as well. We won't get the unemployment rate because, since the government was shut down, there was no one.
Working and able to predict to gather the survey information from households. So that'll actually be the first time since about 70 years that we won't have an unemployment rate for the month of October. But again, it's good that the government is back open. We'll start to get these data releases in a more normal fashion.
I, and we certainly appreciate that. I know the Fed does, since we were all kind of flying blind there for a while. So I'm going to leave it there for this week. We're off next week due to the holiday, but I hope you all have a great Thanksgiving. I'll look forward to catching up when we return. And if you have any questions between now and then, please don't hesitate to reach out to your financial advisor.