November performance was in elite company

By: Edward Jones
DEWITT, Mich. - Dec. 5, 2023 - PRLog -- Stocks have been on their comeback tour in 2023, mounting a nearly-20% gain so far this year after a lousy 2022. The latest leg of that tour has been particularly enthusiastic, with the market having just closed the books on a banner November. Stocks capped off the month with another gain last week, adding to the weekly winning streak that helped the S&P 500 post its first monthly gain since July.1

The strong November run was supported by favorable news in all the right spots: inflation continued to trend lower, the Fed signaled that it doesn't have to keep tightening policy from here, the economy continued to defy the gravity of high interest rates, and corporate earnings came in better than expected. In other words, the November rally has a backbone. That doesn't mean the market won't slouch occasionally as we turn the corner to 2024, but with stocks now near their highs for the year, we're closing out 2023 with some pep, and we think the market can maintain good posture next year.
  • U.S. stocks gained 9% in November, the best month in nearly a year and a half, and the seventh-best monthly return in the last 30 years. This was the second-best November performance during those three decades.  The S&P 500 is up nearly 12% since the October 27 low.1
Stocks just had one of their best months in three decades.
  • This erased the weakness experienced from August through October, when resurfacing interest-rate worries prompted a 10% correction. November's rally propelled the S&P 500 to a new high for 2023 and offers another reminder that pullbacks can create opportunities for disciplined investors.  
  • We noted in our Weekly Market Wrap in late-October that we believed rates could be peaking, which we believed would be a catalyst for a rally. One month an investment journey does not make, and we'll see if December can keep the momentum going. But the forces that have supported the recent gains do have the potential to keep a wind at the market's back as we close out 2023.
  • It wasn't only stocks that were invited to the party. In fact, investment-grade bonds (as measured by the Bloomberg Aggregate Bond index) logged their best monthly return in the last 30 years. It should not be ignored that bonds had their worst month during that period last September, but this underscores the fact that the pain in the bond market doesn't have to persist indefinitely, and it is consistent with our view that interest rates should continue to moderate through next year, supporting the case for improved bond returns.
Sources: 1. Bloomberg.

Edward Jones - Mae Luchetti
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