Market Analysis Report: S&P 500 Weekly Surge & New Year's Rally Prospects

On November 30, 2025, a Reddit user posted a recap of the S&P 500’s (SPX) performance for the week of November 24-28, 2025, highlighting a

—the highest since May 2025. The rally was attributed to Fed rate-cut hopes, bullish 2026 market projections from major banks (Deutsche Bank/JPMorgan), and strong daily gains. The user noted November’s overall 0.13% gain despite the week’s surge and debated whether the New Year’s Rally had begun. Key bearish arguments included concerns about the rally’s sustainability and tariff-induced inflation inflating Black Friday spending figures.

The S&P 500’s 3.73% weekly gain (November 24-28) marked its strongest performance in six months [1]. This surge was driven by:

1. Fed Rate Cut Expectations
   : Market odds of a December rate cut rose to
   87%
   (from 39% the prior week) following comments from New York Fed President John Williams hinting at near-term policy adjustments [4]. JPMorgan reversed its earlier stance to forecast a 25-basis-point cut in December [4].
2. Bullish Bank Projections
   : Deutsche Bank set a 2026 S&P 500 target of
   8,000
   (mid-teens returns expected), while JPMorgan’s baseline target of
   7,500
   included upside potential to 8,000 if the Fed cuts rates more aggressively [2][3].
3. Sector-Wide Momentum
   : All sectors except Financial Services and Healthcare posted gains, with Energy leading (1.13%) and Communication Services (0.80%) and Consumer Defensive (0.89%) following closely [0].

The rally’s sustainability depends on:

• Fed policy actions (December 10 meeting outcome)
• Corporate earnings momentum (S&P 500 Q3 earnings grew 13.4% YoY [2])
• Holiday spending trends (tariff impacts on consumer behavior)

1. S&P 500 Performance
   :
   • Weekly gain (Nov 24-28):
     3.73%
     [1]
   • November 2025 gain:
     0.13%
     (to 6,849.09) [1]
   • Year-to-date (as of Nov 28):
     18.44%
     from Election Day (Nov 5, 2024) [1]

2. Black Friday Spending
   :
   • Total sales: $18 billion (3% YoY increase) [5]
   • Average selling prices:
     7% YoY increase
     [5]
   • Order volumes:
     1% YoY decrease
     [5]
   • Key insight: The sales growth was driven primarily by price increases (tariff-induced inflation) rather than higher transaction volumes.

3. Market Sentiment
   :
   • Fed rate cut probability (December):
     87%
     [4]
   • Bank projections: 7,500-8,000 S&P 500 target for 2026 [2][3]

• Long-term sustainability of the rally: Historical data shows similar surges can precede corrections, but current fundamentals (earnings growth, Fed policy) support bullish sentiment.
• Tariff impact on Q4 corporate margins: While Black Friday data reflects price increases, the full effect on Q4 earnings remains to be seen.

• Bullish Case
  : Fed rate cuts, strong earnings growth, and AI-driven productivity gains (Salesforce reported $14.2 billion in global online sales driven by AI agents on Black Friday [5]) support continued momentum.
• Bearish Case
  : The rally may be overextended (S&P 500 is 0.61% off its record high [1]), and tariff-induced inflation could erode consumer spending power in the medium term.

1. Overvaluation Risk
   : The S&P 500’s current valuation (near record highs) raises concerns about potential corrections if earnings growth slows or Fed policy becomes less accommodative.
2. Tariff Impact
   : Black Friday sales growth was inflated by price increases (7% YoY) rather than volume gains, indicating consumer strain from tariff-induced inflation [5]. This could lead to weaker Q4 spending if price sensitivity increases.
3. Policy Uncertainty
   : While rate cuts are expected, any deviation from market expectations (e.g., no December cut) could trigger volatility.

• December 10 Fed policy decision
• Q4 corporate earnings reports
• Holiday spending trends (Cyber Monday and post-Thanksgiving data)
• Tariff policy updates and their impact on consumer prices