November was the eighth straight positive month for the stock market, while the worst single month for 2017 was only less than one-half of one percent to the downside. There have been stronger years for the stock market, but the lack of volatility this year has been nearly unprecedented.
Is this the calm before a storm? Maybe. Maybe not. Most of our clients’ lifestyle would be unaffected by the stock market swinging up or down because of thorough planning. Of course we all prefer the upswing! If you like fun facts, December has never been the worst month of any stock market year!
CONSUMERS ACT ON THEIR CONFIDENCE
A new factoid points out just how well the economy is doing: the federal government just upgraded its estimate of third-quarter growth to 3.3%. New data on consumer spending and confidence hints at fourth-quarter strength. Personal spending improved 0.3% in October following the 0.9% leap in September, and household wages were up 0.4% in October for a second straight month. At a mark of 129.5, the Conference Board’s consumer confidence index reached a YTD peak in November, having soared 9.1 points in two months.1,2
TWO VERY POSITIVE HOUSING SIGNALS
New homes are selling strongly. October saw a 6.2% advance for new home buying according to the Commerce Department, with sales up 30% in the Northeast; the annualized rate of new home purchases was the best in a decade. In addition, the National Association of Realtors announced a 3.5% gain in its pending home sales index for October, a turnaround from the 0.4% September decline.1,3
MANUFACTURING SECTOR MAINTAINS A HECTIC PACE
The Institute for Supply Management’s October factory sector purchasing manager index came in at 58.2 last week – a sign of significant expansion. That was half a point below its September reading, but still far above the 50.0 dividing line between sector growth and contraction.4
MORE UPS THAN DOWNS ON WALL STREET
News from the nation’s capital affected equity index performance more than anything else as November ebbed into December. When the closing bell called an end to a rollercoaster trading day on Friday, the weekly numbers looked better for the Dow Jones Industrial Average (+2.86% to 24,231.59) and S&P 500 (+1.53% to 2,642.22) than for the Nasdaq Composite (-0.60% to 6,847.59). The CBOE VIX volatility index climbed 18.20% for the week to 11.43.5
Monday, no major economic news items are scheduled. On Tuesday, a new ISM service sector PMI arrives, plus earnings from AutoZone, Bank of Montreal, Land’s End, and Toll Brothers. Wednesday, ADP issues its November payrolls report; investors also review earnings from American Eagle Outfitters, Analogic, H&R Block, Broadcom, Fred’s, Hudson’s Bay Co., and Lululemon Athletica. Thursday offers the latest Challenger job-cut report, a new weekly initial claims report, and earnings from Dell Technologies, Dollar General, and Toro. Wall Street considers the Department of Labor’s November employment report Friday along with the initial University of Michigan consumer sentiment index for December.
|% CHANGE||YTD||1-YR CHG||5-YR AVG||10-YR AVG|
|REAL YIELD||8/11 RATE||1 YR AGO||5 YRS AGO||10 YRS AGO|
|10 YR TIPS||0.51%||0.48%||-0.79%||1.63%|
Sources: wsj.com, bigcharts.com, treasury.gov – 12/1/175,6,7,8
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly. These returns do not include dividends. 10-year TIPS real yield = projected return at maturity given expected inflation
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1 – marketwatch.com/economy-politics/calendars/economic [12/1/17]
2 – bloomberg.com/quote/CONCCONF:IND [12/1/17]
3 – thestreet.com/story/14403381/1/with-real-sector-booming-what-housing-sector-stocks-will-pop-.html [11/27/17]
4 – instituteforsupplymanagement.org/ismreport/mfgrob.cfm?SSO=1 [12/1/17]
5 – markets.wsj.com/us [12/1/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=12%2F1%2F16&x=0&y=0 [12/1/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=12%2F1%2F16&x=0&y=0 [12/1/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=12%2F1%2F16&x=0&y=0 [12/1/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F30%2F12&x=0&y=0 [12/1/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F30%2F12&x=0&y=0 [12/1/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F30%2F12&x=0&y=0 [12/1/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=DJIA&closeDate=11%2F30%2F07&x=0&y=0 [12/1/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=COMP&closeDate=11%2F30%2F07&x=0&y=0 [12/1/17]
6 – bigcharts.marketwatch.com/historical/default.asp?symb=SPX&closeDate=11%2F30%2F07&x=0&y=0 [12/1/17]
7 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyield [12/1/17]
8 – treasury.gov/resource-center/data-chart-center/interest-rates/Pages/TextView.aspx?data=realyieldAll [12/1/17]