December 2015 - Market Update
- The Dow Jones Industrial Average returned 0.71% in November. The NASDAQ Composite gained 1.28%.
- The S&P 500 finished November about 50 points, or 2.3%, below its May 21, 2015 all-time high of 2,130.
- As West Texas Intermediate (WTI) crude oil prices fell by $5 to $41.65/barrel in November, U.S. auto sales head to record highs, with an expected annualized sales pace of 18.2 million vehicles last month.
U.S. stocks ended November with small gains, extending a fourth quarter rally into a second month. The benchmark index finished slightly lower on November’s Cyber-Monday month-end session, trimming its monthly gain, as investors reviewed lackluster traffic and sales data in traditional “brick-and-mortar” stores, while online retailers captured the majority of sales. Even so, the 2015 Holiday shopping season is expected to be the best since before the 2008 financial crisis. Equities have benefited from continuing signs of overall economic recovery, while also being challenged by an impending U.S. Federal Reserve interest rate hike, perhaps as early as mid-December. On November 24, the U.S. Bureau of Economic Analysis upwardly revised its estimate for third quarter GDP growth to 2.1% from 1.5%. A third and final GDP figure is scheduled for release on December 22. Global market jitters surrounding the looming U.S. rate hike were assuaged after minutes from the Federal Open Market Committee (FOMC) policy meeting revealed that subsequent rate hikes will be “shallow and gradual.”
Just four of the ten major sector groups advanced in November, led by Financials (+1.89%), Industrials (+0.93%) and Technology (+0.87%). Materials (+0.83%) gained the least, while Utilities (-2.14%) and Telecom (-1.26%) fell the most among decliners. Year-to-date (YTD), Consumer Discretionary (+13.26%) and Technology (+8.41%) remain this year’s top performers. Hurt by sagging oil prices, Energy (-12.48%) remains this year’s worst performing sector.
Small-cap stocks, as measured by the Russell 2000 Index, jumped 3.25% in November, widely outperforming its mid and large-cap counterparts. Mid-cap stocks rose 0.25%, as measured by the Russell Midcap Index. Small and mid-cap stocks both turned positive YTD, rising 0.64% and 0.25% respectively. Value stocks edged out growth in November with the Russell 1000 Value Index up 0.38%, while the Russell 1000 Growth Index gained 0.28%. However, the Russell 1000 Growth Index has extended its strong YTD performance, returning 7.24%, while the Russell 1000 Value Index remains in negative territory, down 1.71% so far this year.
Internationally, the MSCI EAFE Index, a broad measure of 21 global developed markets outside of the U.S. and Canada, fell 1.56% last month, trimming its YTD gain to 0.54%. The MSCI Emerging Markets Index fell nearly 4% last month, giving back more than half of its 7.13% October surge. Emerging market stocks widened their YTD losses to 12.98%.
Treasuries, as measured by the Barclays U.S. Government Bond Index, fell by 0.40% in November and are returning just 1.03% YTD. Given a potential near-term Fed rate hike, Treasury prices fell last month, with the yield on two-year Treasury notes climbing by about 21 basis points in November, their largest monthly gain since December 2009. In contrast, the yield on benchmark 10-year U.S. Treasuries rose just five basis points, ending the month at 2.21%. U.S. investment grade corporate, government and agency-backed bonds, as measured by the Barclays U.S. Aggregate Bond Index, fell 0.26% last month, trimming the YTD return to 0.88%. The Barclays U.S. Corporate High Yield Index, a proxy for below-investment grade corporate bonds, plunged 2.22% in November. The high-yield bond index is now down 2% YTD. The Barclays U.S. Municipal Bond Index rose 0.40% last month, lifting its YTD gain to 2.58%.
This report is created by Cetera Investment Management LLC
About Cetera Investment Management
Cetera Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. It provides investment research, portfolio and model management, and investment advice to its affiliated broker-dealers, dually-registered broker-dealers and registered investment advisers.
About Cetera Financial Group
Cetera Financial Group® is the retail investment advice platform of RCS Capital Corporation (NYSE: RCAP) that delivers the benefits of scale to its family of independent broker-dealer firms and registered investment advisers while providing a framework that nurtures relationships, unique cultures and unbiased objectivity. As the second largest independent financial advisor network in the nation by number of advisors and a leading provider of investment programs to financial institutions, Cetera Financial Group provides award-winning wealth management and advisory platforms, comprehensive broker-dealer and registered investment adviser services, and innovative technology to its family of broker-dealer firms nationwide.
Through those firms, Cetera Financial Group offers the stability of a large, established broker-dealer and registered investment adviser, while serving independent and institutions-based financial advisors in a way that is customized to their individual needs. Cetera Financial Group is committed to helping advisors grow their businesses and strengthen their relationships with their investor clients. All of the Cetera Financial Group broker-dealer firms are members of FINRA/SIPC. For more information, visit ceterafinancialgroup.com.
The material contained in this document was authored by and is the property of Cetera Investment Management LLC. Cetera Investment Management provides investment management and advisory services to a number of programs sponsored by affiliated and non-affiliated registered investment advisers. Your registered representative or investment adviser representative is not registered with Cetera Investment Management and did not take part in the creation of this material. He or she may not be able to offer Cetera Investment Management portfolio management services.
Nothing in this presentation should be construed as offering or disseminating specific investment, tax, or legal advice to any individual without the benefit of direct and specific consultation with an investment adviser representative authorized to offer Cetera Investment Management services. Information contained herein shall not constitute an offer or a solicitation of any services. Past performance is not a guarantee of future results.
For more information about Cetera Investment Management strategies and available advisory programs, please reference the Cetera Investment Management LLC Form ADV disclosure brochure and the disclosure brochure for the registered investment adviser your adviser is registered with. Please consult with your adviser for his or her specific firm registrations and programs available.
No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.
All economic and performance information is historical and not indicative of future results. The market indices discussed are not actively managed. Investors cannot directly invest in unmanaged indices. Please consult your financial advisor for more information.
Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.
The Barclays U.S. Aggregate Bond Index, which used to be called the Lehman Aggregate Bond Index, is a broad base index, maintained by Barclays Capital, and it often used to represent investment grade bonds being traded in the U.S. Barclays Capital (BarCap) U.S. Aggregate Bond Index is made up of the Barclays Capital U.S. Government/Corporate Bond Index, Mortgage-Backed Securities Index, and Asset-Based Securities Index, including securities that are of investment grade quality or better, have at least one year to maturity, and have an outstanding par value of at least $100 million.
The Barclays U.S. Municipal Bond Index is an unmanaged, market-value-weighted index of investment-grade municipal bonds with maturities of one year or more.
The Barclays U.S. Corporate High Yield Index measures the market of USD-denominated, non-investment grade, fixed-rate, taxable corporate bonds. Securities are classified as high yield if the middle rating of Moody’s, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt.
The Barclays U.S. Government Bond Index is comprised of the U.S. Treasury and U.S. Agency Indices. The index includes U.S. dollar-denominated, fixed-rate, nominal US Treasuries and US agency debentures (securities issued by US government owned or government sponsored entities, and debt explicitly guaranteed by the US government). The US Government Index is a component of the U.S. Government/Credit and U.S. Aggregate Indices, and eligible securities also contribute to the multi-currency Global Aggregate Index. The U.S. Government Index has an inception date of January 1, 1973.
The CBOE Volatility Index® (VIX®) is a key measure of market expectations of near-term volatility conveyed by S&P 500 stock index option prices.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.
The MSCI EAFE is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.
MSCI Emerging Markets is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.
The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.
The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 Index companies with higher price-to-book ratios and higher forecasted growth values.
The Russell 1000 Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000 Index companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.
The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. The Russell Midcap represents approximately 31% of the total market capitalization of the Russell 1000 companies.
The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The Shanghai Composite Index is a stock market index of all stocks (A shares and B shares) that are traded at the Shanghai Stock Exchange.
The STOXX Europe 600 Index is derived from the STOXX Europe Total Market Index (TMI) and is a subset of the STOXX Global 1800 Index. With a fixed number of 600 components, the STOXX Europe 600 Index represents large, mid and small capitalization companies across 18 countries of the European region: Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom.