Markets “In a Nutshell” for November 9, 2021
Investment Week at a Glance
Stocks finished higher for the week. The Dow Jones Industrial Average rose 1.40%, the S&P 500 was up 2.00%, and the NASDAQ rose 3.10%. Foreign stocks (MSCI EAFE) were also up, rising 1.60%. Bond prices were higher for the week, with the 10-year U.S. Treasury ending the week at 1.45%. (Data source: Wall Street Journal)
Fed Begins to Taper
Last week the Federal Reserve announced its plans to begin its taper of asset purchases by $15 billion per month. Currently, the Fed is buying $120 billion in bonds per month which means the taper will last until June of 2022. The market had been expecting this news so there was very little reaction to when this was announced. The bigger fear for the market was that the Fed would have to raise rates but Chairman Powell stated they still believe this inflation is transitory, but with less certainty than before. Powell also stated that the Fed will continue to be patient with rates hikes which caused equities to rally to all-time highs once again. The market had priced in roughly 2.5 rates hikes in 2022 and after Powell’s remarks, the market now has less than 2 rate hikes priced in.
Market Moving Forward
Markets will look to carry the recent momentum into the end of the year as the S&P 500 is now up over 25% for 2021. History shows that the chances of a positive November and December are pretty high – since 1989, November has been positive 78% of the time and December 81% of the time. The economy also looks to continue to grow moving into the end of the year as 531,000 jobs were added in October, the most since July. This was also the first time in three months that the jobs number beat estimates. Unemployment also came down to 4.6% as we continue to move closer to the 3.5% we saw pre-pandemic. It is also expected the supply-chain constraints we have seen recently will ease as more people join the workforce. Congress also was able to pass the $1.2 billion infrastructure package this weekend. Although a lot of positive news has hit the market recently, there are still many worries such as inflation that could give the market some worry.
What is the average combined return for the months of November and December since 1989? (Scroll Down for Answer)
Have a Great Week!
2) 3.7%, November and December have been 2 of the 3 strongest months for the market since 1989.