Here in the Long house we have successfully finished off the Thanksgiving leftovers! With the first holiday in this holiday season behind us, we turn our focus to the year- end -- ensuring we are checking off our checklist of year-end planning for all our clients and turning our family's focus on to the Christmas season.
During this time we will spend time as a family -- delivering our holiday treats to clients, and volunteering for one of our favorite charities, Serving Our Kids, delivering holiday meals later this month. What are some of your holiday traditions you and your family like to engage in through the season?
And now onto the weekly recap:
The stock market closed out the month of November with solid gains and began the month of December on a positive note. Friday's close marked a new 52-week high for the S&P 500, which brushed up against the 4,600 level at its high of the day.
Notably, mega cap stocks were somewhat left behind this week. The Vanguard Mega Cap Growth ETF (MGK) eked out a 0.1% while the S&P 500 rose 0.8%. The equal weighted S&P 500 jumped 2.5%.
Only two of the S&P 500 sectors logged a decline, communication services (-2.5%) and energy (-0.1%). The rate-sensitive real estate sector (+4.6%) saw the biggest gain, followed by materials (+2.6%), industrials (+2.1%), and financials (+2.1%).
There was likely some fear of missing out on further gains in this seasonally strong period for the market contributing to the positive action this week, but the biggest driving factors were interest rates and rethinking rate cuts in the first half of 2024.
The 2-yr note yield, which is most sensitive to changes in the fed funds rate, plunged 39 basis points this week to 4.56%. The 10-yr note yield declined 24 basis points to 4.23%.
Also, the fed funds futures market now sees a much higher probability of a rate cut in May (89.0%) compared to one week ago (47.8%), according to the CME FedWatch Tool.
Some Fed officials pushed back on the idea that rate cuts will occur in the first half of 2024, but that did not deter investors. Richmond Fed President Barkin (2024 FOMC voter), Fed Governor Bowman (FOMC voter), and Fed Chair Powell all made comments this week indicating that they believe it is premature to talk rate cuts.
Investors received a slate of economic data this week that continue to look consistent with a soft landing scenario for the economy. Notable releases included: a stronger than expected November Consumer Confidence Index, an upward revision to Q3 real GDP to 5.2% from 4.9%, a moderation in income and spending, and disinflation in the PCE Price Indexes in October, a much stronger-than-expected Chicago PMI for November, and a relatively low level of initial jobless claims.
Market participants were also digesting more earnings news that was generally met with positive responses. Some of the most notable earnings news was the better-than-expected results from software enterprise names such as Snowflake (SNOW) and Elastic (ESTC). Dow component Salesforce (CRM) was another big winner after reporting earnings.
In other news, several OPEC+ countries confirmed additional voluntary cuts to the total of 2.2 million barrels per day, beginning January 1 through the end of March 2024. WTI crude oil futures declined 1.5% this week to $74.07/bbl.
Below are truncated summaries of the daily action this week:
The data provided is for informational purposes only and is not an endorsement of any security, mutual fund, sector, or index. The information contained here is not guaranteed as to accuracy or completeness. All economic and performance information is historical and does not guarantee future results.
The Dow Jones Industrial Average is a price-weighted index comprising 30 widely traded blue chip U.S. common stocks. The NASDAQ Composite Index is a market-value-weighted index of all common stocks listed on the NASDAQ stock exchange. The S&P 500 Index tracks the performance of 500 of the largest publicly traded companies in the United States. The MSCI Europe, Australasia, and Far East (EAFE) Index tracks the performance of publicly traded large- and mid-cap stocks of companies in those regions. The Cboe Volatility Index (VIX) shows the market’s expectation of 30-day volatility and is constructed using the implied volatilities of a wide range of S&P 500 Index options. Weekly and year-to-date figures for the VIX show percentage changes, not investment returns. The Russell 2000 Index tracks the performance of approximately 2,000 publicly traded small-cap companies in the United States. It is not possible to invest directly in an index.
The Treasury yield curve is derived from available U.S. Treasury securities trading in the market and is provided directly by the U.S. Federal Reserve. The spread measures the difference in yield between two government securities. A normal (positive) yield curve occurs when longer-term rates are higher than shorter-term rates. The opposite holds true for an inverted yield curve. Year-to-date changes in U.S. Treasury bond yields are shown in basis points (bps). One hundred basis points equals one percent.
Oil prices are represented by West Texas Intermediate (WTI) crude oil.
The G20 countries comprise a mix of the world’s largest advanced and emerging economies, representing about two-thirds of the world’s population, 85% of global gross domestic product, and over 75% of global trade.