The month of November 2024 offered exciting developments in the financial markets, setting the stage for the year's final period. As uncertainty lingered around the elections, interest rate trajectories, and labor market dynamics, the presidential election results and the Federal Reserve's monetary policy decisions quickly stabilized market sentiments.

U.S. Stock Market Cheers

November proved fruitful for long-term investors, showing continued enthusiasm in U.S. equities. With the presidential election concluded, major stock indices, including the S&P 500, Nasdaq 100, and Dow Jones Industrial Average, celebrated a winning month. The S&P 500 rose by 5.73%, the Nasdaq 100 increased by 5.23%, and the Dow surged ahead with a 7.54% gain, making it six of the last seven months that have seen positive movements for the S&P 500.

Fed Rate Cuts Align with Market Expectations

This month, the Federal Reserve decided to lower the overnight lending rate by 25 basis points, bringing the range to 4.50%–4.75%, keeping in line with market anticipations. There was unanimous support for this move, aiming to boost the labor market. Currently, there is a 66% probability of an additional rate cut at the next December meeting, reinforcing the central bank's cautious approach to supporting economic growth.

Inflation and Treasury Yield Movements

Inflation data for October released in November showed a 0.2% increase, aligning with expectations and indicating an annual rate of 2.6%. Notably, shelter costs contributed heavily to inflation, despite an otherwise stable inflation environment. Additionally, the 10-year Treasury Note Yield experienced a minor decrease, closing at around 4.177% for the month, an improvement for prospective mortgage borrowers.

Labor Market and Consumer Pulse

Job creation for October was modest, with only 12,000 new jobs added. Lower than expected numbers were partly due to hurricane impacts, but despite the labor data, major equity indexes surged post-release. Consumer confidence reached new heights, reflecting optimism post-elections, with retail sales performing robustly despite challenging conditions.

Markets Display Calm

November saw a remarkable reduction in market volatility, with the CBOE S&P 500 Volatility Index hitting lows not seen since July 2023. This decrease in market unease illustrates a regained investor confidence and a reduced demand for protective market hedging options.

As the calendar year draws to a close, it remains beneficial to consult a dedicated financial team to proactively manage your portfolio in light of these economic changes and ensure optimized tax outcomes. Feel free to give me a call.