Wall Street has just started a historically strong month amid easing tariff tensions and earnings season, as quoted on CNBC. The CNBC article indicated that historically, November is the best month of the year for the S&P 500, with an average gain of 1.8% since 1950, according to the Stock Trader’s Almanac. In post-presidential election years, November ranks as the third-best month, normally rising 1.6%.
Market Outlook Turns More Bullish
The S&P 500 now sits just shy of the 7,000-mark, way above the 6,555 year-end-target (as quoted on CNBC) predicted by most strategists. With sentiment improving and more bears retreating, bullish voices on Wall Street say betting against this resilient market is not a good idea, the same CNBC article noted.
Year-End Rally to Gain Momentum?
As Wall Street enters the final stretch of 2025 on solid ground, with all three major indexes posting strong year-to-date gains. The Dow Jones Industrial Average is up 12.2%, the S&P 500 has advanced more than 16%, and the tech-heavy Nasdaq Composite has surged over 23% (as of Oct. 31, 2025), thanks to the AI boom. NVIDIA rose to a $5 trillion market cap last week.
Fed Policy Easing
Wall Street entered this November in an easing Fed policy era.Last week witnessed a Fed rate cut. By a 10-2 vote, the Fed slashed interest rates by a quarter percentage point for the second consecutive meeting this year, bringing its benchmark rate down to a range of 3.75%-4.00% (per CNBC).
The decision — though taken amid limited economic data due to the ongoing government shutdown and chances of further cut in December is up in the air — reflects the central bank’s intention to bolster economic growth and strengthen the labor market.
Signs of U.S.-China Trade Truce?
Hopes of easing U.S.-China trade tensions have also boosted investor confidence. President Donald Trump and China’s Xi Jinping recently concluded a meeting in Busan, South Korea. The two sides apparently reached an understanding to pause new trade tensions, including China’s rare-earth licensing regime, and to resume U.S. agricultural imports such as soybeans.
China will end investigations targeting U.S. companies involved in the semiconductor supply chain, according to a White House announcement, per Bloomberg, as quoted on Yahoo Finance.
Holiday Season Sales
About 91% of consumers plan to celebrate the winter holidays, per NRF data. People these days normally buy items much ahead of December to avoid the last-minute rush. NRF said that consumers are likely to shell out the second-highest amount on record this holiday season.
Average spending is likely to be $890.49 per person this year, 1.3% less than last year’s record of $901.99, per NRF. The slight fall is probably due to higher prices because of tariffs.
ETF Picks for November
Against this upbeat economic backdrop, below we highlight a few exchange-traded funds (ETFs) that could be bought now.
High Beta – Invesco S&P 500 High Beta ETF (SPHB)
The ETF SPHB can be a good pick amid easing Fed policy as well as trade tensions. The upcoming holiday season sales should provide another boost to the market.
Consumer Discretionary – Consumer Discretionary Select Sector SPDR ETF (XLY)
The Zacks Rank #3 ETF XLY is heavy on Amazon (20.46% weight), followed by Home Depot (6.33% weight). As the month of November should see a considerable amount of holiday shopping, consumer discretionary ETFs are likely to benefit.
Software – SPDR S&P Software & Services ETF (XSW)
The fast and vast adoption of AI in every sector opens up immense opportunities for AI software companies to develop customized solutions. Unlike AI hardware, which is mainly a one-time sale (as quoted on Forbes), meaning demand would wane at some point in time, AI software is sold on a subscription basis. This indicates that AI software will always remain in demand. One can thus bet on XSW ETF.
Aerospace – iShares U.S. Aerospace & Defense ETF (ITA)
About 61.5% of the sector weight of the S&P 500 has already reported earnings, per the Earnings Trends issued on Oct. 29, 2025. The space has reported earnings growth of as high as 226.1% so far this season on 15% higher revenues. This makes ITA a great bet.
Small-Caps – iShares Russell 2000 ETF (IWM)
Fed rate cuts, easing trade tensions and not-so-rich small-cap valuation make the case stronger for IWM investing right now. The upbeat risk-on sentiments in the year-end and decent U.S. economic growth may be held responsible for the likely small-cap rally.
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iShares Russell 2000 ETF (IWM): ETF Research Reports Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports Invesco S&P 500 High Beta ETF (SPHB): ETF Research Reports SPDR S&P Software & Services ETF (XSW): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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