Market Note: Volatility Returns, Fundamentals Remain Strong

By Hightower Great Lakes on November 10, 2025

Growth Intact

After a calm stretch through September and October, volatility has finally resurfaced in early November. The S&P 500 is still up 15% year-to-date and 36% from the April 8^th lows. While headlines around layoffs and labor market uncertainty have added to near-term jitters, the broader backdrop remains resilient.

Government data remains limited due to the shutdown, but private indicators like ADP employment and ISM surveys suggest that the labor market is cooling, not collapsing. In the most recent ADP report, U.S. companies added 42,000 jobs[1], indicating signs of stabilization in the labor market.

Many of the announced layoffs appear more tied to post-COVID over-hiring and productivity gains from AI, rather than signs of widespread weakness. At the same time, corporate fundamentals continue to impress. The Atlanta Fed’s GDPNow tracker remains at 4%, and earnings growth has accelerated to 12.3%.

AI and Industrial Strength

Beneath the surface, the AI and data center investment cycle remains a powerful force driving industrial and technological strength. Rockwell Automation (ROK), seen as a traditional industrial name, posted adjusted EPS of $3.34 vs. $2.47, up 35% year-over-year, and nearly 14% revenue growth.

Eaton Corporation (ETN) reported data center sales up 40%, orders up 70%, and total backlog up 17% year-over-year.[2] These figures highlight how deeply this AI-driven CapEx cycle is rippling through the economy.

Even among Apple, Amazon, Microsoft, and Alphabet, earnings estimates have been revised higher following results, underscoring the durability of profit growth in the sectors most exposed to cloud, data center, and AI infrastructure spending. Despite the market’s recent volatility, the underlying story remains one of strong growth, expanding margins, and powerful secular investment tailwinds.

Profitability From the Banks

The banking sector is showing signs of improvement. Return on tangible common equity (ROTCE), a key measure of profitability, has been rising across the major banks. J.P. Morgan, Wells Fargo, Morgan Stanley, and Bank of America all reported higher ROTCEs this quarter, signaling better cost control and margin recovery.

In Q3, Morgan Stanley delivered an impressive ROTCE of 23.5%, J.P. Morgan posted a ROTCE of 20%, Wells Fargo reported 15.2% and raised its medium-term target to 17–18%, and Bank of America came in at 15.4%, also lifting its target range to 16–18% at its first investor day since 2011.[3]

Positioning for 2026

While the broader setup remains constructive, investors are becoming more selective. Some are using recent volatility to harvest losses for tax purposes or trim positions that failed to participate in the rally. At the same time, there’s growing interest in quality growth names that have corrected sharply but continue to show operational improvement.

Starbucks is beginning to show signs of a turnaround under CEO Brian Niccol. The stock initially surged 48% in 5 months following his appointment, but has since given back those gains. Starbucks recently beat revenue expectations with $9.6 billion versus analyst estimates of $9.34b and reported its first positive same-store sales growth in nearly two years, which is a meaningful milestone that signals early progress.

Uber also had a positive quarter in the consumer-tech space. The company reported 159% earnings growth and over 20% revenue growth, with gross bookings up 21% year-over-year. The delivery business for Uber also accelerated the most in 4 years, up 25%.[4]

Looking Ahead

Historically, markets tend to finish the year on a strong note, and the setup into year-end 2025 appears no different. Over the past five years, the S&P 500 has gained an average of 8.6% cumulatively from October through December, with cyclical and growth-oriented sectors typically leading the way.

Financials have averaged the strongest performance at +11.9%, followed by Technology +10.6%, Industrials +10.4%, and Energy +9.5%.[5] Even defensive groups such as Consumer Staples and Utilities have posted solid mid-single-digit gains during this period.

With roughly $7 trillion sitting on the sidelines, this level of liquidity represents pent-up buying power that could reenter equities as confidence builds into year-end. Meanwhile, credit spreads remain notably tight, a signal that financial markets are not flashing signs of stress.

Corporate balance sheets are healthy, funding costs remain manageable, and the bond market continues to validate the soft-landing narrative. Taken together, liquidity and stable credit conditions create an environment where any short-term volatility should be viewed as an opportunity rather than a warning.

Historically, the market’s strongest seasonal stretch occurs between October and December, and this backdrop of sidelined cash and contained risk premiums provides strong support for that pattern to continue.

Fixed Income

U.S. Treasury yields ended the week largely unchanged, masking notable intraweek volatility driven by mixed labor market signals. Yields rose sharply on Wednesday following a stronger-than-expected October ADP employment report and an upside surprise in ISM Services data.

However, Thursday saw a reversal as the Challenger Job Cuts report revealed a softer labor market tone, prompting a modest pullback in yields. By week’s end, the 2-year and 10-year yields declined by 2 & 1 basis points, respectively, while the 30-year yield edged higher by 1 basis point.

Corporate credit spreads widened across both investment-grade and high-yield last week. Investment-grade spreads expanded 3 basis points to +118, while high-yield spreads widened 12 basis points to +352.[6] Municipal bond market performance followed Treasuries last week, as yields were 1 basis point lower across the curve.

Return for Selected Indices[7]

Click here to read last week’s Market Note (11/3).

Disclosures

Investment Solutions is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is neither indicative nor a guarantee of future results. The investment opportunities referenced herein may not be suitable for all investors.

All data or other information referenced herein is from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other data or information contained in this presentation is provided as general market commentary and does not constitute investment advice. Investment Solutions and Hightower Advisors, LLC or any of its affiliates make no representations or warranties express or implied as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information. Investment Solutions and Hightower Advisors, LLC assume no liability for any action made or taken in reliance on or relating in any way to this information. The information is provided as of the date referenced in the document. Such data and other information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed herein are solely those of the author(s) and do not represent those of Hightower Advisors, LLC, or any of its affiliates.

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[1] Bloomberg: As of November 5, 2025

[2] Eaton Corporation: Earnings Call: As of November 4, 2025

[3] Bloomberg: As of October 2025

[4] Bloomberg: As of November 4, 2025

[5] Bloomberg: As of November 7. 2025

[6] Bloomberg: As of November 9, 2025

[7] Source: Bloomberg. As of November 9, 2025.