12.2.24 Weekly Market Commentary
Week In Review
November is a historically favorable month for the equity markets, with an average monthly gain of +1.9% for the S&P 500 over the last fifty years.
3 That record was reinforced as the prevailing index delivered a massive +5.9% return this November, the best monthly performance of the year. In a holiday-shortened week, the financial markets relied on two major economic reports to clinch the outsized gain. The minutes of the Fed’s November meeting arrived on Tuesday and despite some uncertainty regarding economic conditions and the interest rate level required for a neutral stance, committee members confirmed their readiness to proceed with cautious rate reductions as progress on inflation appears sustainable. The PCE Price Index for the month of October was announced on Wednesday and provided some validation of that headway, with the 2.3% increase over the past year in line with forecasts. The yield on the 10-year U.S. Treasury fell to 4.24% on the news and the S&P 500 climbed +1.1%.
This Week
The financial markets have several notable economic updates that could influence the interest rate decision at the FOMC meeting later this month. The ISM Manufacturing Index will be accompanied by the ISM Services Index and the Fed Beige Book for November. Taken together, they may provide additional insight into the recent contraction in business activity. Fed Chairman Jerome Powell’s participation in a moderated discussion mid-week will likely expound on the aforementioned economic releases. The economic study wraps up with the nonfarm payrolls report on Friday.
Portfolio Themes
Reinvestment risk is becoming evident as a more accommodative Federal Reserve monetary policy unfolds and the Treasury yield curve normalizes. Bonds maturing in six months or less have seen substantial declines in yield. Simplicity offers model portfolios that hold fixed income securities with longer maturities, safeguarding higher income potential in the future.
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Data: Unless otherwise noted, data for charts, graphs, and tables is sourced from YCharts. Portfolio Themes chart sourced from State Street Global Advisors.
1 Style box returns use various Russell indices tied to specific areas of the market cap (vertical) and style (horizontal) spectrums.
2 Index Statistics: P/E TTM – Calculated by dividing an investment’s price by the trailing 12-month earnings per share value. Yield – Expected dividend-per-share divided by current share price. Table statistics are updated monthly. MSCI indices represent broad global and international equity markets. Indices are represented by iShares ETF proxies (IVW, IVV, IVE, ACWI, and ACWX). Past performance does not guarantee future results.
3 YCharts. Weekly commentary and investment advisory services are provided by Simplicity Wealth, LLC a SEC Registered Investment Adviser. Registration does not imply a certain level of skill or training. The information provided is for informational purposes only and does not constitute any form of advice or recommendation. The information contained within has been obtained from various sources and is believed to be accurate at the time of publication.
