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Stocks notched solid gains in November, thanks to solid economic data, improving trade sentiment, and upside earnings surprises.
The Dow Jones Industrial Average picked up 3.72 percent, while the Standard & Poor’s 500 Index gained 3.40 percent. The NASDAQ Composite led, jumping 4.50 percent. It was the best month since June for the three indices.1
October’s momentum continued into the new month as both the S&P 500 and NASDAQ Composite set record highs on the first day of November, after a better-than-expected employment report.
Stock prices continued their march higher on the strength of growing trade optimism and solid corporate earnings. But stocks turned lower in the wake of comments by President Trump that made it clear no trade deal with China had been reached.
Investors appeared unfazed by Fed Chair Jerome Powell’s testimony in Congress, which reinforced the Fed’s position that short-term rate cuts would remain on pause until economic data dictate otherwise.
The gradual climb higher finally lost momentum, due to fresh concerns sparked by President Trump’s threats to impose new tariffs if a “phase one” trade agreement could not be reached.
However, in the final week of trading, stocks pushed higher after some upbeat comments from China about how talks are progressing.
Industry sectors were broadly higher in November, with gains in Communication Services (+4.81 percent), Consumer Discretionary (+1.81 percent), Consumer Staples (+1.52 percent), Financials (+5.45 percent), Health Care (+8.45 percent), Industrials (+4.86 percent), Materials (+3.43 percent), and Technology (+6.63 percent). Three sectors, Energy (-0.05 percent), Real Estate (-1.75 percent), and Utilities (-1.64 percent), ended lower.2
With the December shopping season upon us, investors will be searching for clues about the health of the consumer. Retail spending can give an early inkling of fourth-quarter earnings, even before corporations begin reporting their results in January 2020.
Holiday shopping is critical to the economy, accounting for 20 percent of annual retail sales.3 The National Retail Federation expects holiday sales to rise by 3.8 percent to 4.2 percent, but due to a quirk of the calendar this year, retailers may be challenged to meet those expectations.4
The holiday shopping season is six days shorter than last year’s, due to the late arrival of Thanksgiving this year. For now, the consumer appears confident. But market watchers are expected to keep close eyes on the pace of consumer spending through the end of the year.
Overseas markets trailed U.S. equity performance, with the MSCI-EAFE Index gaining 1.37 percent in November.5
European stocks were generally higher on an improving trade outlook, with major markets posting positive returns. France gained 3.06 percent, Germany rose 2.87 percent, and the United Kingdom picked up 1.53 percent.6
Pacific-Rim stocks were mixed. Australia tacked on 2.74 percent, but Hong Kong lost 2.08 percent.7
U.S. economic growth in the fourth quarter was revised higher, from 1.9 percent to 2.1 percent, owing to upward revisions in inventory and business investment.8
Payrolls rose by 128,000 in October, an upside surprise from consensus estimates. The unemployment rate ticked higher to 3.6 percent, a rise that was attributed to more Americans looking for work.9
Retail sales rose 0.3 percent, a relief from the previous month’s decline.10
Industrial output fell for the third time in the last four months, declining 0.8 percent.11
Housing starts increased 3.8 percent in October, while permits for future construction reached the highest level in more than 12 years.12 Existing home sales rose 1.9 percent, exceeding consensus forecasts and reversing the previous month’s decline.13 New home sales unexpectedly fell 0.7 percent, though they were higher by 31.6 percent over October 2018.14
Consumer prices jumped 0.4 percent in October, with higher energy prices accounting for the bulk of the increase. Core inflation, which excludes the more volatile food and energy sectors, rose 0.2 percent.15
Orders of goods designed to last three years or more moved higher by 0.6 percent, a rebound from their September decline.16
Minutes of the last Federal Open Market Committee meeting showed a more unified Fed. More members agreed that in the wake of its third cut in short-term interest rates, it was time to pause and assess future economic data to determine the path of monetary policy.
The members also agreed that weak manufacturing and business investment posed a credible risk to the health of the U.S. consumer.17
People who are expected to travel during the holiday
Travelers by car
Travelers by air
Number of seasonal holiday workers retailers are expected to hire
Amount Americans are expected to spend on holiday shopping
Total amount the average shopper is expected to spend on gifts
Gross Domestic Product of New Zealand
Weight of trash generated from gift wrapping during the holiday
Percent of people expected to bake or buy desserts this holiday
The Midwest's favorite holiday flavor
The South’s favorite holiday flavor
America’s favorite holiday dessert
America’s second-favorite holiday dessert
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1. The Wall Street Journal, November 30, 2019
2. Factset Research, November 30, 2019
3. SmallBusiness.com, October 7, 2019
4. SmallBusiness.com, October 7, 2019
5. MSCI.com, November 30, 2019
6. MSCI.com, November 30, 2019
7. MSCI.com, November 30, 2019
8. The Wall Street Journal, November 28, 2019
9. The Wall Street Journal, November 1, 2019
10. The Wall Street Journal, November 15, 2019
11. MarketWatch.com, November 15, 2019
12. CNBC.com, November 19, 2019
13. The Wall Street Journal, November 21. 2019
14. CNBC.com, November 26, 2019
15. The Wall Street Journal, November 13, 2019
16. CNBC.com, November 27, 2019
17. The Wall Street Journal, November 20, 2019
18. TravelAgentCentral.com, 2019
19. CloudWays.com, October 15, 2019
20. The World Bank, 2019
21. The National Retail Federation, 2019
22. DawnFoods.com, 2019
23. Offers.com, November 18, 2019