November 2023 in Review

by Daniel Zeigler, CFP®, CMFC®, Senior Portfolio Manager

Welcome to the monthly market update from Midland Wealth Management. I am Dan Zeigler, Senior Portfolio Manager. Today I just wanted to spend a few minutes to give you an update on the markets for the month of November.

Market Returns for November

Wow – November will be a month to remember in both stocks and bond returns. November was one of the S&P 500’s best months in over 70 years and bonds had one of their best months since the 1980s. A better-than-expected lower inflation rate earlier in the month had investors betting that the Federal Reserve will be done raising rates and inflation may continue to trend lower. In fact, investors are now anticipating that the Federal Reserve may have to cut several times next year, which may be a little too aggressive.

The S&P 500 Index was up about 8.9% and the tech-heavy NASDAQ Composite Index was up close to 10.70% for the month. An impressive rally in one month, however, the major indexes were coming off a swift reversal from the 3rd quarter selloff. The S&P 500 is now up 20.75% for the year, as the big technology companies continue to lead the way.

Bonds are having their best month since 1985 after yields peaked in late October. The Bloomberg U.S. Aggregate Bond Index was up nearly 5% for the month of November. The 10-year Treasury yield, which peaked around 5% in late October, is now down to about 4.25%. The lower rates have helped mortgage rates move lower for the 5th week in a row, with the 30-year mortgage rates near 7.2%, off their highs earlier this year.

GDP

The U.S. economy grew faster than initially thought in the 3rd quarter with GDP being revised higher from 4.9% to 5.2%, as both business investment and government spending were revised higher. Future GDP growth is expected to subside in the 4th quarter with some economists expecting a growth rate between 1.5% to 2.0%.

Federal Reserve

On December 1st, Fed Chair Powell suggested that the central bank may be done raising interest rates if inflation and the economy continue to cool as expected. However, the central bank will be prepared to tighten policy further if it becomes appropriate to do so. The Fed is expected to leave interest rates unchanged at their next meeting on December 12th and 13th. Interest rates remain high with a range between 5.25 and 5.5% for the Federal Funds Reserve. The higher rates continue to weigh on demand for mortgages, car loans, and business debt, as the Fed looks to continue to cool the economy to lower inflation.

Outlook

The economy is expected to slow down, especially after the robust GDP in the 3rd quarter. All eyes will be on the next jobs number which will be released on December 8th. Last month, the economy added 150,000 jobs to the labor market and the unemployment rate remains low at 3.9%. As we head into the last month of the year, investors will look for signs that the stock market will broaden out beyond the ‘Magnificent Seven.’ As always, thanks for joining me for this month’s market recap.