Stocks ripped higher in November as extreme pessimism morphed into confidence about interest rates and inflation.
The S&P 500 surged 8.9 percent between October 31 and November 30, its biggest monthly gain since July 2022. The index is back near peaks from the summer, within 0.8 percent of its 52-week high.
A broad swath of economic reports made investors think inflation is coming under control. It began with productivity surprising to the upside. October’s data then showed weaker job growth and wage pressures, plus an uptick in unemployment. While negative on the surface, the numbers suggested that the economy is cooling enough to lower prices. (A dramatic shift in sentiment resulted.)
More confirmation followed when the consumer price index (CPI) didn’t rise as expected. The Federal Reserve also kept rates unchanged, followed by noncommittal speeches by policymakers.
The next major events could be a pair of items in two weeks: CPI on Tuesday, December 12, and the next Fed meeting on Wednesday, December 13. There’s also an important employment report next Friday, December 8.
Market Rotation
Technology stocks, which have led the market higher this year, continued to advance. But lagging sectors like real estate and financials also came to life. Both had fallen because of higher interest rates and could potentially benefit from easier Fed policy.
Some of the biggest gainers, like Insulet (PODD) and Generac (GNRC), were rebounding from selloffs in earlier months. That may suggest investors were value hunting and looking for opportunities in new areas. Traditional retailers like Gap (GPS), Macy’s (M) and Foot Locker (FL) also jumped on strong quarterly reports.
Safe-havens like consumer staples, utilities and health care were near the bottom of November’s rankings. That may suggest that investors have more risk appetite. Energy was the only negative sector as increased supply pulled down oil prices.
The S&P 500 ended the month at a falling trendline along the highs of early 2022 and July. Traders may watch for consolidation or signs of a breakout through the potential resistance.
Big Movers in November
| Top Gainers in the S&P 500 Last Month | ||
| Expedia (EXPE) | +43% | The online travel company beat estimates and announced a new share buyback. It also received an investment from ValueAct Capital Management. |
| Insulet (PODD) | +43% | The diabetes company rebounded from a four-month slide after reporting strong quarterly results. |
| Generac (GNRC) | +39% | The maker of backup generators beat earnings estimates as inventories stabilized. It also received upgrades from Guggenheim, Bank of America and Stifel. |
| Gen Digital (GEN) | +33% | The provider of digital security reported strong bookings and received positive commentary from Bank of America and Morgan Stanley. |
| Paramount (PARA) | +32% | The media company’s earnings and revenue beat estimates. |
| Top Decliners in the S&P 500 Last Month | ||
| Paycom (PAYC) | -26% | The software company missed revenue estimates and issued weak guidance on signs that a product change hurt business. |
| Cigna (CI) | -15% | The health insurer dropped on reports it planned to merge with Humana (HUM) in a potentially complicated transaction. |
| APA (APA) | -9.4% | The energy stock followed oil prices lower. |
| BorgWarner (BWA) | -8.7% | The auto-parts supplier cut its full-year guidance amid weak demand for electric vehicles. |
| Fortinet (FTNT) | -8.1% | The cybersecurity company issued weak guidance for the second straight quarter. |
Sector Watch
| Technology | +13% |
| Real Estate | +12% |
| Consumer Discretionary | +11% |
| Financial | +11% |
| S&P 500 | +8.9% |
| Industrials | +8.8% |
| Materials | +8.3% |
| Communications | +7.8% |
| Health Care | +5.4% |
| Utilities | +5.1% |
| Consumer Staples | +4.1% |
| Energy | -0.8% |
Key Economic Events in November
Below are some key economic events from last month.
- Productivity Jumps as Wage Costs Ease: Labor Productivity rose 4.7% in the third quarter, half a percentage point more than forecast. Labor costs fell by almost 1%. The news reduced worries about wages driving an inflation higher. (11/2)
- Payrolls Miss; Joblessness Increases: Non-farm payrolls increased by less than expected in October. Wages also missed and unemployment rose more than forecast. The news reduced worries about interest-rate hikes. (11/3)
- Inflation Slows More Than Expected: The Consumer Price Index (CPI) was unchanged in October, below estimates for a 0.1% increase. Core inflation was also lower than expected. The news reduced worries about interest rates. (11/14)
- Strong Start to Online Holiday Shopping: Black Friday showed a strong start to online holiday shopping, according to private data. MasterCard Spendingpulse reported an 8.5% increase. Adobe Analytics cited growth of 7.5%. (11/27)
What Experts Are Saying
Below are some noteworthy commentaries.
- U.S. inflation could slow to 2% by next June, according to ING Economics. Lower rents, falling energy costs and tighter financial conditions are helping drive the trend. Such a drop would align price pressures with central bank targets. (11/9)
- The Fed won’t hike interest rates again, according to Moody’s Analytics Chief Economist Mark Zandi. He cited October’s cooler-than-expected inflation report, noting lower prices for energy and new vehicles. (11/14)
- The Fed may cut interest rates as early as March, Wharton School Professor Jeremy Siegel said in a CNBC interview. He said inflation is ending because tight monetary policy is squeezing liquidity. (11/15)
- U.S. could see deflation before the end of 2023, Walmart CEO Doug McMillon said on the company’s earnings call. (11/16)
- Artificial intelligence (AI) will continue to drive growth in the technology sector, according to UBS analysts. They predicted software and Internet stocks will monetize previous investments in the technology. Semiconductors could also benefit, they said. (11/22)
Popular Futures Contracts in November
| Product | Current Month | Expiration | Next Month | 1-Mon% |
| S&P 500 E-Mini (@ES) | ESZ23 (Dec) | 12/15/23 | ESH24 | +8.5% |
| Nasdaq-100 E-Mini (@NQ) | NQZ23 (Dec) | 12/15/23 | NQH24 | +10% |
| Dow Jones E-Mini (@YM) | YMZ23 (Dec) | 12/15/23 | YMH24 | +8.6% |
| Russell 2000 E-Mini (@RTY) | RTYZ23 (Dec) | 12/15/23 | RTYH24 | +8.6% |
Newsworthy Events This Month
| Date | Event | What to Watch For |
| Fri 12/8 | Employment report | Job-market conditions: unemployment, wages, hours worked. |
| Tue 12/12 | Consumer price index (CPI) | Inflation trends |
| Wed 12/13 | Fed meeting, press conference | Interest rates, comments on inflation, labor market and restrictiveness of current policy |
| Thu 12/14 | Retail sales | Will sales beat estimates for a fifth straight month? |
| Tue 12/19 | Housing starts, building permits | Housing-market activity |
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