Markets “In a Nutshell” for November 14, 2022
Investment Week at a Glance
Stocks finished higher for the week. The Dow Jones Industrial Average rose 4.10%, the S&P 500 was up 5.90%, and the NASDAQ rose 8.10%. Foreign stocks (MSCI EAFE) were also up, rising 5.70%. Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 3.82%. (Data source: Wall Street Journal)
Inflation Slows in October
With inflation worries and interest rates continuing to be the main topic of conversation for investors, the new data caused markets to jump. The October CPI reading was 7.7% which was the smallest year-over-year increase since January. This is also a 0.5% decline in just 1 month as CPI was 8.2% in September. Markets jumped seeing this number as many hope this is just the beginning of inflation falling back to reasonable levels. Yields declined quickly with hopes of inflation cooling down as the Fed may not have to continue to raise rates for much longer. With rates quickly falling, the tech sector was able to be an outperformer for the week with the NASDAQ up over 8% in just this past week.
Better Days for Growth Stocks Ahead?
Throughout the year value stocks have been able to outperform growth stocks due to rising rates and inflation worries leading to a slowdown in the economy and a possible recession. Large-cap growth is down 22% more than large-cap value so far this year. However, with yields possibly nearing their peaks in the next couple of months, growth stocks are expected to begin to perform much better than we have seen so far this year. Growth was able to perform so well in 2020 and 2021 in part due to interest rates being next to nothing for the majority of the time. While it was just one week, last week was the perfect example as rates quickly fell and the tech sector was nearly up 11% in just one week but still down nearly 35% for the year. If rates continue to fall or even stabilize, this could be a sign of things to come as investors as eager to get back into the large-cap growth companies after having a rough 2022.
What is historically the best month of the year for stock returns? (Scroll Down for Answer)
Have a Great Week!
1) December. Since 1950, December has been the best month for the S&P 500 with November being tied for the 2nd best.