Welcome to the monthly market update from Midland Wealth Management. I am Dan Zeigler, Senior Portfolio Manager. Today, I wanted to spend a few minutes to give you an update on the markets for the month of November.
Market Overview
The S&P 500 Index had its best month this year, with a total return of approximately 6% in November. The climb higher was due to positive reaction to the results of the Presidential election and strong economic data. With November’s strong showing, the S&P 500’s total return for the year is around 28%.
Small-cap stocks responded strongly to the results of the election with the SmallCap 600 Index returning approximately 11% for the month of November. The Presidential election results brought optimism to potential corporate tax cuts that would benefit small-cap stocks greatly.
Q3 GDP Growth
The second estimate for third-quarter GDP came in line with the prior estimate of an annualized growth rate of 2.8%.
This quarter’s growth was primarily driven by consumer spending.
Inflation & PCE Update
The latest PCE data showed year-over-year inflation increased slightly to 2.3 % from the previous release of 2.1%. Despite this increase, expectations are for inflation to continue its trend lower towards the Federal Reserve’s target of 2%.
Jobs Market
Economists are anticipating a rebound in November’s job markets, with forecasts suggesting an addition of approximately 200,000 jobs to the economy. This expected increase is attributed to recovery from hurricane disruptions and the resolution of strikes that affected prior figures. The unemployment rate is projected to hold at 4.1%.
Federal Reserve & Bond Market
The Federal Reserve concluded its meeting the day after the election and cut the Federal Funds rate by 0.25% to a new target of 4.50-4.75%. Additionally, another 0.25% cut is projected for the December meeting, which would bring the total rate cuts for 2024 to 1%, lowering the Federal Funds rate to a target of 4.25-4.50%. Looking forward, the market anticipates a Federal Funds rate of around 3.75% by the end of 2025, reflecting expectations for a more supportive interest rate environment as inflation stabilizes.
Despite the recent rate cuts, the 10-year Treasury yield rose throughout most of November before it fell in the last week to a rate of approximately 4.18%.
Outlook
Looking ahead, investors will remain attentive to labor market data, Federal Reserve policy shifts, corporate earnings outlooks, and policy changes under President-elect Trump.
Thanks for joining me for this month’s market update.
