Markets “In a Nutshell” for November 27, 2023
Investment Week at a Glance
Stocks finished higher for the week. The Dow Jones Industrial Average rose 1.30%, the S&P 500 was up 1.00%, and the NASDAQ rose 0.90%. Foreign stocks (MSCI EAFE) were flat. Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 4.47%. (Data source: Wall Street Journal)
Market After Thanksgiving
The stock market typically performs well after Thanksgiving through the end of the year. Over the last 30 years, the average return in December is roughly 1% for the stock market. ¾ of the time December has been positive with the best December coming in 2010 with a rally of 6.5%. The Thanksgiving through the end of the year market also can be a tale of things to come as when positive, the following year markets rose 77% of the time with an average gain of 11%. The more recent December data has not been as strong as 2 of the last 5 Decembers have been negative and the two worst Decembers in the past 30 years. Investors hope to see a strong December to end the year and continue the momentum into 2024.
What is Needed for Market Rally to Continue?
After a correction in the market, November has had a nice bounce for investors as the S&P 500 is up over 7%. For this to continue the market would like to see inflation continue to moderate as CPI is down to 3.2% year over year, closer to the Fed’s 2% goal. The Federal Reserve will also need to stay on the sidelines for markets to continue a rally. If they were to raise rates again markets would likely dip as it is currently priced in that the Fed is done raising rates. The other “goldilocks” scenario is that the economy slightly cools off with slightly lower retail sales and slightly higher jobless claims. Although this sounds bad for the economy, it may be needed to finish off inflation and cause the Fed to cut rates which will then give a boost to the economy and markets as a whole.
How much is the Russell 2000 index up for the year? (Scroll Down for Answer)
Have a Great Week!
4. 3%. The Russell 2000, which is a small cap index, is only up 3% for the year as small-caps have lagged the overall market throughout the year and the divergence really started when we began to see banks collapse in March.