It was a November to remember on Wall Street as bullish spirits drove a surge in ETF investments. Last month, investors poured $149B into US equity ETFs — shattering the previous record of $98.5B set in Dec. 2023. The jump, driven by Trump’s clear election victory and strong market momentum, helped push global ETF flows to an all-time high of $205B.

• US equities led global ETF flows, accounting for over 70% of inflows, while European, Japanese, and emerging market funds saw their first outflows since May 2019.
• Ten major banks, including Morgan Stanley and Goldman Sachs, project the S&P 500 will climb ~8% to reach 6.55K by the end of 2025 — below the historical average annual return of 11%.

Forward-looking: While Wall Street’s rally shows no signs of slowing, Morgan Stanley’s Mike Wilson cautions against market “euphoria,” especially around tech stocks’ ability to monetize AI investments. Although large-cap tech stocks have dominated headlines, Jefferies sees potential for a changing of the guard, predicting the Russell 2000 small-cap index to rise 13.5% by 2025’s end. This forecast suggests smaller companies might finally break their eight-year streak of underperformance against their larger peers — particularly as clean balance sheets and reduced regulatory headwinds spark increased M&A activity.