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Market Recap

November 15, 2023

After several months of pain, November started off with a bang! The first week of the month featured the strongest single-week returns in all of 2023. Gains continued throughout the first half of the month as markets posted modest losses only a couple of days. Several factors have contributed to this positive run. 

The Federal Reserve (the Fed) concluded their most recent meeting on November 1st and in a move that was widely anticipated chose to leave interest rates unchanged. Markets celebrated the decision and posted gains for the day. Perhaps more encouraging were comments from the committee, including an upgrade to the committee’s general assessment of the economy. 

Fed chairman, Jerome Powell, was sure to caution, “The process of getting inflation sustainably down to 2% has a long way to go.” He stressed that the central bank hasn’t made any decisions yet for its December meeting saying, “The committee will always do what it thinks is appropriate at the time.”1

Meanwhile, the October jobs report showed that only 150,000 new jobs were created for the month. That’s half the number for September and significantly lower than the average of 258,000 over the past 12 months.2 It may seem counterintuitive, but the markets celebrate this slowdown in new jobs creation as proof that the Fed’s policies are working – and providing hope that interest rate hikes may be over.

On the inflation front, the October Producer Price Index (PPI), which measures wholesale prices, fell by 0.5% -- the biggest monthly drop since April 2020.3 October consumer prices were unchanged from the September reading, while slumping oil prices drove down headline inflation. This deceleration in multiple measures of inflation has given both investors and Wall Street hope that the Federal Reserve could be done raising interest rates.4    

In his weekly blog post, our favorite economist, Dr. David Kelly, wrote: “…in recent weeks, there has been a quiet decline in tensions across a number of dimensions. This is being matched by falling inflation pressures and signs of moderating economic growth. After a turbulent few months, the economy seems to be back on the soft-landing track, a path that should support both the stock and bond markets and also allow the dollar to resume its stalled-out decline.”5 While time will tell, we are cautiously optimistic moving forward.

Reviewing returns for the first half of November, the markets all posted significant gains. As of market close on November 15th, the Dow rose 1,938 points (5.86%), the S&P 500 grew by 309 points (7.37%) and the NASDAQ Composite Index (NASDAQ) increased 1,253 points (9.75%). “Fed holds rates steady, upgrades assessment of economic growth” November 1, 2023 “Weekly Market Recap; Week ended November 3” November 6, 2023 “Dow adds more than 150 points to clinch fourth winning day, fueled by cooling inflation data” November 15, 2023 “Stock market news today: Stocks soar, yields tumble as inflation pressures ease in October” November 15, 2023

Notes on the Week Ahead, “Falling Tensions in a Cooling Economy” Dr. David Kelly, November 13, 2023

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Capital Analysts or Lincoln Investment. The material presented is provided for informational purposes only. Past performance is no guarantee of future results. No person or system can predict the market. There is no guarantee that any strategies discussed will result in a positive outcome. All investing involves risk and no investment strategy can guarantee a profit or protect against loss, including the potential loss of principal. S&P 500 Index is an index of 500 of the largest exchange-traded stocks in the US from a broad range of industries whose collective performance mirrors the overall stock market. The NASDAQ is an index that tracks the cumulative results on a market capitalization basis of all stocks trading in the NASDAQ system. The Dow Jones Industrial Average is a widely watched index of 30 American stocks thought to represent the pulse of the American economy and markets. Investors cannot invest directly in an index. Diversification does not guarantee a profit or protect against a loss.