Market Insights

Stocks just completed back-to-back positive months for the first time in over a year as investors look for the Federal Reserve to slow aggressive interest-rate hikes.

The S&P 500 rose 4 percent in November following an 8 percent surge in October. (The last set of consecutive gains was in July and August of 2021.) The upside was broad, with all 11 major sectors advancing.

Two sessions accounted for all of the month’s gains. The index rallied 5.5 percent on November 10 after inflation rose less than expected. It then paused until yesterday, when comments by Jerome Powell spurred another 3 percent move.

“It makes sense to moderate the pace of our rate increases,” the Fed Chairman told the Brookings Institution on Wednesday. He added that the reduction from 75 basis points to 50 basis points “may come as soon as the December meeting.” His speech echoed similar comments by Lael Brainard and Loretta Mester earlier in the month.

Strong holiday shopping was another interesting development in November. The National Retail Federation reported the number of active consumers after Thanksgiving increased by 10 percent to a record 196.7 million. Traditional brick-and-mortar stores also rallied on strong quarterly results, including Bath & Body Works (BBWI), Best Buy (BBY), Ross Stores (ROST) and Ralph Lauren (RL).

Big Movers in November

Sector Watch

The table below shows sector performance last month.

Key Economic Events in November

Below are some key economic events from last month.

• Higher jobless rate spurs Fed rate hopes: Unemployment unexpectedly rose to 3.7 percent in October. That spurred hopes the Fed may slow its policy of interest-rate hikes. (11/4)
• Inflation increases less than feared expected: The consumer price index rose 0.4 percent in October, less than the 0.6 percent feared by economists. Core inflation was also lower than expected. (11/10)
• Housing data beats amid tight supply: Housing starts and building permits were higher than expected in October. (11/17) Existing home sales (11/18) also beat forecasts as a real-estate shortage offsets the drag of higher mortgage rates.
• Fed hints at smaller rate hike in December: “A substantial majority” of Fed policymakers wanted to slow interest-rate increases, according to minutes from the November meeting. (11/23)

What Experts Are Saying

Below are some noteworthy commentaries.

• Goldman Sachs sees no recession: Economist Jan Hatzius said the U.S. economy has a 65 percent chance of skirting a recession because of the strong labor market. Unemployment is still likely to increase as inflation slows, he added. (11/7)
• Yardeni expects more gains: Strategist Ed Yardeni told CNBC the S&P 500 could rally 8 percent into yearend because of strong consumer spending. (11/18)
• Historic historic disconnect in energy stocks: Bespoke Investment noted how companies in the sector have held their value despite crude oil sliding. Bespoke attributed the strength to the industry’s strong earnings and a favorable demand environment. (11/23)
• JPMorgan sees bond-market bounce: Fixed-income strategists led by Nikolaos Panigirtzoglou expect supply will fall by $1.6 trillion in 2023. Higher demand and lower inflation could also help stabilize the market, they added. (11/24)
• Tom Lee of Fundstrat expects ‘fireworks.’: Cooling inflation will make the Federal Reserve less hawkish. He predicted the S&P 500 will end the year as high as 4,500. (11/28)

Popular Futures Contracts

Newsworthy Events This Month

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