Stocks Just Did Something For the 1st Time Since Bear Market Began: November Recap

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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).

S&P 500, daily chart, showing key indicators and events.

Big Movers in November

Top Gainers in the S&P 500 Last Month
Abiomed (ABMD)+50%Johnson & Johnson agreed to buy the cardiac-device maker for $17 billion in cash.
Etsy (ETSY)+41%Strong results and guidance lifted the e-commerce stock.
Wynn Resorts (WYNN)+31%The casino operator rose on optimism about Macau reopening.
SolarEdge Technologies (SEDG)+30%Strong revenue and political events boosted the green-energy stock.
Advanced Micro Devices (AMD)+29%The semiconductor firm gained after releasing its new Genoa server chip.
Source: TradeStation Data
Top Decliners in the S&P 500 Last Month
Lincoln National (LNC)-28%The life insurer tanked after taking a $634 million impairment charge.
Lumen Technologies (LUMN)-26%The telecom stock missed earnings and revenue estimates.
Catalent (CTLT)-24%The drugmaker missed estimates and cut guidance.
Advance Auto Parts (AAP)-21%Weak results suggested the retailer is losing market share.
Tesla (TSLA)-14%The electric-car maker fell as Elon Musk focused on Twitter and lockdowns hit China.
Source: TradeStation Data

Sector Watch

The table below shows sector performance last month.

Materials+12%
Industrials+7.8%
Utilities+7%
Financials+6.9%
Communications+6.8%
Real Estate+6.8%
Technology+6.3%
Consumer Staples+7.7%
S&P 500+5.4%
Health Care+4.7%
Consumer Discretionary+1.5%
Energy+1.2%
Source: TradeStation Data

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)
Tesla (TSLA), daily chart, showing key indicators.

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

ProductCurrent
Month
ExpirationNext
Month
1-Mon%
S&P 500 E-Mini (@ES)ESZ22 (Dec)12/16/22ESH23+5.4%
Nasdaq-100 E-Mini (@NQ)NQZ22 (Dec)12/16/22NQH23+5.5%
Dow Jones E-Mini (@YM)YMZ22 (Dec)12/16/22YMH23+5.6%
Russell 2000 E-Mini (@RTY)RTYZ22 (Dec)12/16/22RTYH23+2.4%
Source: TradeStation Data

Newsworthy Events This Month

DateEventWhat to Watch For
Fri 12/2Non-farm payrollsWill unemployment increase again, potentially reducing the Fed’s hawkish policy?
Fri 12/9Railroad strike deadlineWill Congress intervene to prevent a potentially crippling railroad strike?
Tue 12/13Inflation reportNovember’s Consumer Price Index (CPI) is due one hour before U.S. markets open .
Wed 12/14Fed meeting, press conference and projectionsPolicymakers are expected to slow rate hikes. They will also release projections for economic conditions and future policy.
Tues 12/20,
Wed 12/21
Housing & consumer dataHousing starts & building permits on Dec. 20 and consumer confidence on Dec. 21 may provide clues on the economy.

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