November 17, 2023, Weekly US Equity Market Return Recap. Stocks continued their rise upward on the week with the S&P 500 up 2.2% and the Nasdaq finishing +2.4%; the Dow also closed positive, at +1.9%. First, November has historically been a upward month for the US stock market, with the S&P 500 gaining on average +1.7% in November going back to 1950, ranking the top month for positive returns in the year. Second, the economy showed further signs of slowing with the core CPI declining to only +0.2% month-over-month. Further, stock earnings remain stable, with the third quarter’s year-over-year blended earnings growth coming in around 6.6%. However, excluding the energy sector, the growth rate for the index is 12.0%. The stock market sentiment has a bias now for the Fed to pause, and perhaps start cutting rates at some point in 2024. This conviction is reinvigorating money flows into stocks. Yet, Fed Chair Powell comments on Thursday, “We are not confident” that the benchmark rate is sufficiently high to reduce inflation to 2%, the Fed’s target, runs counter to the pause and cut-rate theory. Indeed, Powell also commented “We know that ongoing progress toward our 2% goal is not assured. Inflation has given us a few head fakes along the way.”
November 3, 2023, Weekly Stock Market Return Recap. For the week, the S&P 500 jumped 5.9%, for its biggest gain since November 2022 while the Nasdaq overshot the broad market index, closing the week with a whopping +6.6% gain. The Dow Jones moved up 5.1% on the week, marking its biggest gain since late October 2022. Market sentiment turned bullish on expectations that the Fed could be done with rate hikes. The Federal Reserve held interest rates in the range of 5.25%-5.50%, the highest level since 2001. While the market is clearly taking a victory lap, the Fed left the door open for further rate increases. For example, the Fed elevated its assessment of the economy to "strong" in the third quarter from "solid" in September, then added: "Recent indicators suggest that economic activity expanded at a strong pace in the third quarter." Nonetheless, the market celebrated nonfarm payrolls that came in 20,000 lower than consensus forecast at 150,000 for the month; that was a sharp decline from the gain of 297,000 in September. Further, the unemployment rate rose to 3.9%, the highest level since January 2022, amid a drop in household employment.