The S&P 500 index capped off November with a robust 8.9% rise, marking its 18th strongest monthly performance since 1950. Technology stocks outpaced broader market gains, with the Nasdaq 100 index escalating by 10.8% and recording its fifth-best monthly result in a decade.
Additionally, bond markets rallied as yields took a notable dip, while metal commodities thrived in the wake of a weakening dollar.
Fueling this broad market rally was a surge in investor optimism, anticipating Federal Reserve interest rate cuts in 2024 in response to cooling inflation.
At the end of November, market forecasts leaned toward the Fed commencing its rate-cutting cycle in May 2024, with up to five rate reductions by the end of next year.
Fed’s preferred inflation measure slows
The personal consumption expenditure price index, known as the Fed’s preferred measure of inflation, slowed from 3.4% in September to an annual 3% rate in October, aligning with market expectations. The moderation in inflation further bolstered the prospect of multiple rate cuts in the coming year.
November’s top-performing ETFs
Financial markets experienced a significant upswing in November, with both stocks and bonds on the rise. Here’s a breakdown of the top-performing exchange-traded funds (ETFs) across various asset classes, including country equities, U.S. equity sectors, thematic equities, bonds and commodities.
November rally for treasury bonds
U.S. government bonds are on track for their best month in nearly 40 years following a summer and early autumn sell-off that saw foreign buyers all but desert the Treasury markets.
VIX at pre-pandemic low
The VIX index has hit its lowest point since before the pandemic, just as equity markets are trying to regain their 2023 highs.
Powell remains cautious
In a conversation with Spelman College President Helene Gayle on Friday, Federal Reserve Chair Jerome Powell underscored that it’s “premature” to declare the Fed’s efforts as sufficiently restrictive, highlighting a readiness to adjust policies further if needed.
Charlie Munger’s ‘buy and hold’ thesis
“The whole secret of investment is to find places where it is safe and wise not to diversify,” were the words of Charlie Munger, who died on Tuesday at the age of 99. This principle stood as one of the central tenets of his approach to investing.
Elon Musk highlights Cybertruck
On Thursday, electric vehicle leader Tesla hosted a Cybertruck delivery event at its Giga Factory in Texas. Tesla said it has over 1 million reservations for the pickup truck.
JPMorgan analysts project nightmare scenario
JPMorgan painted a rather pessimistic picture for the U.S. stock market in 2024.
The biggest U.S. bank is forecasting the S&P 500 to drop to 4,200 points next year, implying an 8% fall from current levels in what can be described as a nightmare scenario for stocks.
What to watch
The focus will be on Friday’s non-farm payrolls report, with economists anticipating a November gain of 170,000 jobs, up from October’s 150,000. Additionally, watch for the University of Michigan Consumer Sentiment report on Friday, along with Job Openings and ISM Services PMI on Tuesday.
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Benzinga is a financial news and data company headquartered in Detroit.
