Key Takeaways
- Yardeni Research indicates the early-November stock market pullback may be ending as of November 25, 2025.
- Markets showed a rebound after dovish comments from Fed officials raised odds of a December rate cut to 80.9%.
- Foreign investors sustained strong inflows with $492.7 billion in Treasuries and $646.8 billion in equities over the past year.
Yardeni Research suggests the brief stock market pullback observed earlier in November 2025 might be fading, sparking a rebound as investor sentiment improves. This assessment, shared in a note dated November 25, points to the Federal Reserve’s newly dovish stance lifting the probability of a December interest rate cut, a key driver behind recent market dynamics.
Markets Rebound Following Fed’s Dovish Shift and AI Stock Gains
The recent stock sell-off unsettled markets, especially with volatility hitting AI sector equities and Bitcoin. Earlier in the week, Federal Reserve officials’ hawkish remarks pushed expectations for a December easing below 50%, amplifying downward pressure. However, New York Fed President John Williams and others shifted to a more accommodative tone by Friday, sending the implied odds of a December rate cut soaring to 80.9%. This renewed market confidence, often dubbed the “Fed Put,” fueled a notable rebound.
On Monday, AI-related stocks led gains, with Alphabet (GOOGL) surging 6.3% and Nvidia (NVDA) climbing 2%. Bitcoin recovered robustly from $81,180 on Friday morning to about $89,000 by Monday afternoon, reflecting revived risk appetite. Meanwhile, the U.S. dollar index (DXY) remained steady near 100, underpinned by significant net capital inflows.
Foreign Investment Trends Signal Continued Confidence
Contrary to claims of foreign withdrawal from U.S. assets, Yardeni Research highlights durable and substantial foreign investment. Over the past 12 months through September, private foreign investors added $492.7 billion in U.S. Treasuries, boosting foreign holdings to a record $9.2 trillion. Equity inflows outpaced bond purchases, with $646.8 billion invested in U.S. stocks privately.
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“Foreign private purchases of U.S. equities exceeded Treasury note and bond purchases over the last year,” Yardeni noted, emphasizing the persistent global demand sustaining the dollar and U.S. financial markets. This investment activity suggests that the recent pullback was more a temporary repricing amid shifting Federal Reserve policy expectations than a broad foreign retreat.
Rebound: Market Outlook
Looking forward, Yardeni Research underscores the critical importance of the Federal Reserve’s December 10 policy decision. Should the Fed enact a rate cut as anticipated, the rebound could gain momentum and potentially extend sustainable gains into year-end. The interplay between Federal Reserve signals, strong AI sector performance, and resilient foreign capital inflows creates a cautiously optimistic environment for equities.
Investors should continue to closely monitor Fed communications and capital flow metrics to assess whether this rebound can hold or if volatility may persist. For now, dovish policy cues and ongoing international demand provide a foundation for recovery following November’s correction and a welcome rebound in market sentiment.
