Highlights
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Jobs rebounded in November.
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Stocks rallied following the conclusion of the election.
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Interest rates were stable to slightly lower during the month.
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Concluding thoughts as 2024 draws to a close.
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Economic Update
Employment
November’s Jobs report showed a rebound following disruptions due to strikes and hurricanes that weighed on the October numbers. Nonfarm payrolls rose by 227,000, ahead of expectations, with another 56,000 upward revisions to the prior two months. Wage growth was also strong with a 4.0% year-over-year increase. The headline unemployment rate ticked up to 4.2%
The participation rate, which measures the number of people in the labor force as a percentage of the civilian population moved down for the third month in a row to 62.5%.
Stocks and Bonds
Equities rallied in November as investors responded to the conclusion of the 2024 presidential election with optimism. The U.S. markets posted significant gains, signaling renewed confidence and a risk-on sentiment among traders. Small and Mid-cap stocks led the charge with 11.0% and 8.8% gains, respectively. Among the large-cap benchmarks the Dow gained the most at 7.7%, while the tech-heavy Nasdaq Composite added 6.3%. The broader S&P 500 advanced 5.9%.
However, the positive sentiment wasn’t universal. Foreign markets painted a contrasting picture, with Emerging Markets declining by 2.7% and Developed Markets (EAFE) adding only 0.6%.
Over the past 12 months it’s hard to find much to complain about. The major US benchmarks that encompass large-, mid-, and small-cap stocks have all delivered returns exceeding 30% with the only exception being the Dow Jones Industrial Average, which still managed a solid 27.2% gain. Across the globe returns have been about half that of USA, still very respectable if not quite as spectacular.
All 11 sectors gained in November. Consumer Discretionary and Financial were up double-digits. Health Care fared the worst, managing only a 0.6% gain.
Yields finished the month mostly lower, pushing returns up for the month. At the short end of the curve the yield on the 2-year finished November at 4.15%, roughly the same as where it ended October. Moving further out, the 10-year yield closed out the month at 4.17% compared to 4.28% at the end of October.
The Federal Reserve is scheduled to meet one more time this year in mid-December. As of this writing the probability of another 25 basis point cut is over 90%.
Conclusion
Assuming the S&P 500 holds steady for the remainder of the year, it will mark back-to-back years of 25%+ returns for the index.
Looking further back, the S&P endured a challenging 25% drawdown from January to mid-October 2022.
Even in 2023, often remembered as a strong year, the market faced its own correction. Between early August and late October of last year, the index experienced a 10% peak-to-trough decline, a dip now largely forgotten in light of the broader rally.
In my experience, I’ve yet to meet anyone – professional or client – who has consistently succeeded in timing the zigs and zags of the market. In fact, most are actually un-successful in their timing.
The good news is that successful investing doesn’t require perfect timing or extraordinary luck. Here’s what’s happened if you invested at each of the market peaks in the chart above and just held on:
We firmly believe that embracing a long-term outlook and tailoring your stock allocation to align with your unique risk tolerance offers the most effective path toward achieving your ultimate financial goals.
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