Broker Check

Market Update (November 2021)

November 02, 2021
Markets continued their rally from the September correction during the second half of the month. In fact, all three major indices, the Dow Jones Industrial Average (Dow), the S&P 500 and the NASDAQ Composite Index (NASDAQ) reached new record highs during the last week of October. Additionally this October has had the best gains for the month since October 2015.   
The continuing economic recovery from the COVID-19 pandemic is helping to push markets higher. A surge in new COVID cases, driven by the Delta variant, has begun to subside as vaccinations continue to rise, spurring optimism that a return to “normal” may be on its way.
Weekly jobless claims over the past 2 weeks have consecutively set new lows since the beginning of the pandemic. That’s an encouraging sign that fewer people are filing initial unemployment claims. However, businesses are still struggling to fill the millions of open job postings.
Last week saw the release of third quarter Gross Domestic Product (GDP). As expected, economic growth slowed significantly during the quarter. While second quarter posted a blistering 6.7% growth rate, third quarter missed analysts’ estimate of 2.7%, coming in at a seasonally adjusted rate of 2%. This slowdown was likely caused by supply shortages coupled with decreased consumer spending as we experienced a pause in reopening of services due to the Delta variant. Most economists expect an increase in growth for the fourth quarter as consumer spending and production again rise.
Looking forward, inflation remains a concern for the markets. Additionally the continued stock market rally (with the exception of September) has driven company valuations higher. We may see increased volatility for the remainder of the year, which is typical for the holiday season.
As of October 29th, all major markets posted solid gains for the second half of the month. The Dow grew by 525 points (1.49%), the S&P 500 increased 134 points (3.0%) and the NASDAQ was up 601 (4.03%).