December Market Report
Monthly Market Report
Fighting a riptide of negative news, stock prices turned in a positive performance for the month with the NASDAQ composite leading the way.
The Dow Jones Industrials Average rose 0.32 percent, the Standard and Poor’s 500 Index eked out a gain of 0.05 percent and the NASDAQ Composite Index climbed a more meaningful 1.09 percent.1
The headline for the market this month is the remarkable resiliency it evidenced in the face of a wave of news stories, any one of which had the potential to substantially derail stocks.
The markets initially built on their October gains but fell sharply mid-month on disappointing economic data and further weakness in oil prices. However, stocks began to recover, led by energy stocks, which rallied on a rebound in oil prices.
After sagging in the wake of the terror attacks in Paris on November 13, stocks moved sharply higher following the Fed’s release of its October meeting minutes on November 18 even as it lent further weight to the possibility that rates would be hiked in December of this year.
Negative news surprises mounted as Mali suffered a terror attack, Brussels, Belgium went into lockdown and Turkey announced that it had shot down a Russian jet, inflaming an already tense geo-political situation.
Despite the quick succession of these events, markets edged higher before closing out the month surrendering some of its gains.
All but two industry sectors turned in a positive performance, with gains in Energy (+3.0 percent), Financials (+2.9 percent), Materials (+2.6 percent), Industrials (+2.1 percent), Consumer Discretionary (+2.1 percent), Health (+1.7 percent) and Technology (+1.2 percent). Consumer Staples (-1.5 percent) and Utilities (-3.4 percent) both suffered declines.2
World markets were volatile under the weight of global terror attacks and ongoing economic uncertainty, though European markets bounced back a bit toward month’s end as investors looked to the possibility of another round of quantitative easing by the European Central Bank—something that might be announced coming out of their early December meeting.3
The MSCI-EAFE Index retreated 1.44 percent in November.4
In the Pacific region, Hong Kong fell as the reverberation of the announcement by Chinese regulators of fresh investigations into brokerage operations affected Chinese equities. Japan posted a gain as Prime Minister Abe announced new measures to ignite the Japanese economy. Singapore posted a loss while Australian stocks steadied, ending slightly lower.5
Gross Domestic Product: GDP growth for the third quarter was revised upward, from an initial estimate of 1.5 percent to 2.1 percent. This still reflects a sharp slowdown from the previous quarter’s growth rate of 3.9 percent but remains in character for the modest nature of this six-year economic recovery.6
Employment: The October jobs report showed an increasingly stronger labor market as employers hired at the quickest pace so far this year, while wages rose at the fastest rate since 2009. Non-farm payrolls jumped 271,000, driving the unemployment rate to 5.0 percent, while hourly earnings increased by 2.5 percent.7
Retail Sales: Retail sales continued to struggle, rising just 0.1 percent in October. Over the last 12 months, retail sales have grown just 1.7 percent, a significant deceleration from the previous 12-month growth rate of 4.7 percent.8
Industrial Production: Despite the headline drop of 0.2 percent in industrial production, owing to weakness in oil drilling and milder weather, manufacturing output posted its best growth since July with gains in automobiles, parts, and construction supplies.9
Housing: Housing starts declined 11.0 percent from the previous month, depressed by a pullback in the building of apartments and condominiums. New applications for building permits, which serves as a harbinger for future construction, rose 4.1 percent.10
Existing home sales fell by 3.4 percent, slowed by high prices in markets such as California and in oil-dependent areas such as parts of Texas, Louisiana and North Dakota.11
New home sales jumped 4.9 percent, continuing a string of positive gains that have translated into a year-to-date increase of 15.7 percent over the same period last year.12
CPI: After two months of declines, consumer prices rose 0.2 percent in October as prices increased for a range of services from medical care to the cost of shelter. The strong U.S. dollar continued to depress import prices and lower the cost for goods made overseas.13
Durable Goods Orders: Orders for durable goods—products designed to last three years or longer—rose 3.0 percent in October, a welcome rise in view of its year-to-date decline of 4.2 percent versus the same period in 2014.14
The release of the minutes from the FMOC’s meeting in October revealed that the Fed is anticipating that December could well be the time to hike rates. The minutes went on to say that the track of subsequent rate hikes would be shallow and gradual.15
The Fed’s two-day December meeting is scheduled to start on Tuesday, December 15.
Overshadowed by the tragic attacks in Paris was a gathering of leaders of the G-20 nations in Turkey. Already facing weak global economic growth and simmering sovereign debt troubles, leaders were confronted with additional concerns over how security issues might weigh on economic recovery.
The tools available to G-20 nations to ignite growth are dwindling. Japan just entered into recession despite previous fiscal and monetary stimulus, Eurozone growth remains anemic even after a round of quantitative easing in September, and China’s five-year economic plan contemplates a lower growth rate.
Efforts to spur growth through investments in infrastructure and reforms intended to boost productivity have fallen short of previous G-20 promises. The latest meeting ended with little actionable agreement other than a commitment to consider future actions.
Scant progress was made on addressing the simmering sovereign debt issues, except for obtaining Italy’s agreement to permit the IMF to monitor its fiscal reforms.
Meeting the economic challenges that confront global leaders will require overcoming the financial and political obstacles these leaders face at home. The degree of success at doing so and how well they manage the heightened terror threat climate may define whether 2016 is marked by resurgent global economic growth or a slide into recession.
By The Numbers
‘Tis the Season
Amount Americans are expected to spend on holiday shopping:
GDP of Argentina: $540 billion 17
Anticipated rise in retail sales over last year: 3.7% 16
Average expected per-person spending on holiday merchandise: $805 16
Rise in per-person spending over 2014: $3 16
Share of holiday browsing and buying that will take place online: 46% 16
Percent of shoppers that rank free shipping or shipping promotions as a key factor in purchase decisions: 47% 16
Number of people who shopped online or in-store over Thanksgiving weekend 2014: 134 million 16
Population of Japan: 127 million 18
Percent of shoppers who bought a present for themselves during the same weekend: 77% 16
Number of seasonal jobs expected to be added during the holidays in 2015: 750,000 19
Portion of total 2014 retail sales that occurred during the holidays: 19.2% 19
Number of real Christmas trees sold in the US each year: 33 million 20
Number of fake Christmas trees sold each year: 9.5 million 20
Number of Christmas trees currently growing on Christmas tree farms: 350 million 20
Average growing time for a Christmas tree: 7 years 20
Percentage of consumers who cut down their own tree: 16% 20
“Must Have” gift of 2015: Frozen Sing Along Elsa Doll 21
Of 1985: Pound Puppies 21
Of 1995: Beanie Babies 21
National Ugly Christmas Sweater Day: December 18 22
Number of Amazon items that pop up under the search cue “ugly Christmas sweater”: 50,264 23
Price of an Ugly Christmas Sweater with your favorite NBA team logo: $69.99 24
Share of Americans who feel a lot of happiness and little worry on a typical day: 48% 25
Share of Americans who feel so on Christmas Day: 64% 25
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.
Investing involves risks, and investment decisions should be based on your own goals, time horizon and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize and are subject to revision without notice.
The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Please consult your financial advisor for additional information.
Copyright 2015 FMG Suite.
1. The Wall Street Journal, November 30, 2015
2. Thumbcharts.com, Visual Data, Inc., November 30, 2015
3. MSCI.com, November 31, 2015
4. MSCI.com, November 31, 2015
5. MSCI.com, November 31, 2015
6. The Wall Street Journal, November 24, 2015
7. The Wall Street Journal, November 6, 2015
8. The Wall Street Journal, November 13, 2015
9. The Wall Street Journal, November 17, 2015
10. The Wall Street Journal, November 18, 2015
11. The Wall Street Journal, November 23, 2015
12. The Wall Street Journal, November 25, 2015
13. The Wall Street Journal, November 17, 2015
14. The Wall Street Journal, November 25, 2015
15. The Wall Street Journal, November 18, 2015
16. National Retail Federation, November 2, 2015
17. World Bank, 2015
18. CIA.gov, 2015
19. Statista.com, 2015
20. StatisticBrain.com, July 13, 2014
21. StatisticBrain.com, October 1, 2015
22. Nationaluglychristmassweaterday.org, 2015
23. Amazon.com, 2015
24. NBA Store, 2015
25. Fivethirtyeight.com, December 23, 2014