November 2024: A Stellar Month for Investors

As we approached November 2024, the financial landscape was clouded with a mix of uncertainty, thanks to pending elections, "higher" interest rates, and ongoing labor market questions. However, by early November, the fog had lifted. The presidential election concluded, the Federal Reserve’s November meeting decisions were set, and it shaped up to be a fantastic month for long-term investors.

Strong Performance of Major Stock Indexes

November turned out to be a rewarding period for those invested in U.S. stocks. U.S. equities continued their upward trend leading up to, and following, the election period. The month marked six positive months out of the last seven for the S&P 500, and eleven out of the last thirteen. The results were indeed worth celebrating. Over the course of the month, the S&P 500 gained 5.73%, the Nasdaq 100 increased 5.23%, and the Dow Jones Industrial Average surged ahead, with a 7.54% increase.

Impact of the Fed’s Rate Decision

The month began with the Federal Reserve’s policy meeting on November 7th. The Fed proceeded with a 25 basis point cut, reducing the overnight lending rate amid keen pre-election anticipation. This latest decision follows a substantial 50 basis point reduction in September, adjusting the target lending rate to a range of 4.50% - 4.75%. The goal, a unanimous decision, aimed to bolster the labor market. At the month's end, the CME FedWatch Tool indicated a 66% probability of another 25 basis point cut at the December 18th meeting, with a 34% chance of rates remaining unchanged.

Shifts in Treasury Yields

Treasury yields witnessed a moderate decline in November, offering good news for sidelined mortgage borrowers and long-term investors in equities. The 10-year Treasury Note Yield closed the month near 4.177%, down from October's 4.285%, a decline of over 10 basis points. This slight dip in yields contributed to favorable borrowing conditions.

Labor Market and Economic Indicators

The labor market data released in early November indicated modest job growth, with only 12,000 jobs added and downward revisions in previous months totaling 112,000. Although disappointing, the industry's expectations anticipated this outcome, largely due to the impacts of Hurricanes Helene and Milton. Despite subdued job creation numbers, markets reacted positively, with stock indexes like the Nasdaq, Dow, and S&P 500 registering gains.

Mixed Inflation Insights

Inflation data for October presented a mixed picture, with the Consumer Price Index showing a 0.2% month-over-month increase, maintaining a year-over-year rate of 2.6%. The Core CPI matched expectations, with significant contributions from rising shelter costs. This keeps concerns about persistent inflation alive, though markets anticipate another rate cut, with its probability increasing to approximately 82%.

Resilience of the Consumer

Consumer confidence saw a surge in November, bolstered by the swift election outcome. The confidence index reached a 16-month high at 111.7. Retail sales beat expectations, while early Black Friday data showed a 3.4% rise in spending. Consumers continue to demonstrate resilience, driving the economy forward against various headwinds.

As the year draws to a close, it’s essential to consider any year-end portfolio adjustments. We encourage you to consult with our financial team to ensure your investments are structured optimally and to receive personalized financial guidance tailored to your needs.