Markets “In A Nutshell” for November 28, 2022

Markets “In a Nutshell” for November 28, 2022

Investment Week at a Glance

Stocks finished higher for the week.  The Dow Jones Industrial Average rose 1.80%, the S&P 500 was up 1.50%, and the NASDAQ rose 0.70%. Foreign stocks (MSCI EAFE) were also up, rising 1.20%.  Bond prices were up for the week, with the 10-year U.S. Treasury ending the week at 3.70%.  (Data source: Wall Street Journal)

Markets Move Higher in Shortened Trading Week

With Thanksgiving, the market was closed on Thursday, and Friday the market closed early with the Holiday. Stocks and bonds both moved higher this past week as yields continued to decline giving hope to investors that yields may have reached a peak. As we move toward the end of the year many are hoping to see a Santa Claus rally to boost portfolios in December. As we begin to close out a rough year for the market, we have seen some strength in the market of recent. The S&P 500 is up over 12% since mid-October and is now only down 15% for the year. The Dow Jones has performed even better and is currently just down 5% for the year. Although still down across all indices, markets have been able to have a much stronger 2nd half to the year as the S&P 500 is up 6% since the end of June.

Bonds Having Historically Bad Year

Before this market downturn, bonds typically gave portfolios some stability when equities would struggle. This past year has been the opposite with both equities and fixed income declining throughout the year leaving investors nowhere to hide. This is caused by high inflation forcing the Fed to quickly raise rates to try and slow inflation before the economy overheats. With these higher rates, bonds issued in the past were issued at much lower yields. This makes those bonds less attractive as now you can buy bonds with much higher yields than those that were issued just last year. There is some hope however as bonds market returns are over 16% historically in the 12 months following the peak of interest rates during a rate hike cycle.

 

Quiz:

Quiz

What is the worst year for the bond market since 1926? (Scroll Down for Answer)

1.    1941
2.    1970
3.    2008
4.    2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

Answer:

4)    2022.   If bonds do not have a strong rally in December, this will become the worst year for the bond market since it began being tracked in 1926.