Markets continued their upward trend for the second half of November. In fact, the month of November has posted the strongest returns in over a year, back to July of 2022.
Helping to buoy markets was recent positive economic news. Third-quarter (Q3) earnings reports have wrapped up and companies in the S&P 500 have posted an average gain of 4.3% (as compared to Q3 2022). That gain marks the first quarter of earnings growth in the last 12 months. 1
The Bureau of Economic Analysis revised their initial reading of Q3 economic growth up, from 4.9% to 5.2%.2 This strong reading strengthened hopes that the Federal Reserve (Fed) may be able to deliver a soft landing, where inflation is curbed without compromising economic growth or pushing the economy into a recession.
The Personal Consumption Expenditure Price Index released on Thursday showed more good news. October’s inflation reading came in at 3.5%, down from September’s 3.7% and May’s 5%.3 This index is the Fed’s preferred reading for inflation and the rapid reduction in rates shows the policies are working…and gives the markets hope that rate cuts may come soon.
Heading into the last month of the year, markets are feeling very optimistic. Adam Turnquist, chief technical strategist at LPL Financial, summed up his expectations, “Our market right now is just looking at the longer-term trend in inflation and obviously it’s coming down – the Fed is acknowledging that. I think the scope for a Santa Claus rally is growing. We’re not extremely overbought. I think there’s more room for participation in the rally.”4
Reviewing returns for the second half of November, the markets all posted gains. As of market close on November 30th, the Dow Jones Industrial Average (Dow) rose 960 points (2.74%), the S&P 500 climbed 65 points (1.4%) and the NASDAQ Composite Index (NASDAQ) gained 122 points (0.87%).
1www.jhinvestments.com “Weekly Market Recap; Week ended November 24” November 27, 2023
2www.barrons.com “Stocks Lose Steam Ahead of Inflation Report” November 29, 2023
3www.cnbcnews.com “Dow jumps 520 points as investors cheer inflation slowdown” November 30, 2023
4www.cnbc.com “Dow ends Wednesday near flat, but the major averages remain on track for big November gains” November 29, 2023
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