Monthly Market Insights | December 2019

U.S. Markets

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

The most difficult thing is the decision to act, the rest is merely tenacity. Amelia Earhart, American aviator

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.

Influence of Trade Talks

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.

It’s All About Trade

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.

Sector Scorecard

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

U.S. Market Recap for November 2019
S&P 500 3.40% Month ‌ 25.29% Year-to-Date	NASDAQ 4.49% Month ‌ 30.60% Year-to-Date	Russell 1000 3.56% Month ‌ 25.47% Year-to-Date	10-Year Treasury 1.77% Month ‌ -0.92% Year-to-Date
Yahoo Finance, November 30, 2019. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid.

What Investors May Be Talking About in December

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

Fewer Shopping Days

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.

World Markets

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

World Market Recap for November 2019
Emerging Markets	November	Year-to-Date
Hang Seng (China)	-2.08%	1.94%
Kospi (Korea)	0.22%	2.30%
Nikkei (Japan)	1.60%	16.38%
Sensex (India)	1.66%	13.1%
Jakarta Composite (Indonesia)	-3.48%	-2.95%
Bovespa (Brazil)	-0.48%	22.93%
IPC All-Share (Mexico)	-1.19%	2.83%
Merval (Argentina)	-1.41%	13.89%
ASX 200 (Australia)	2.74%	21.25%
Europe
DAX (Germany)	2.87%	25.36%
CAC 40 (France)	3.06%	24.83%
Dow Jones Russia Index (Russia)	1.09%	34.60%
FTSE 100 (Great Britain)	1.53%	9.51%
Yahoo Finance, November 30, 2019. The market indexes discussed are unmanaged and generally considered representative of their respective markets. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results. International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.

Indicators

Gross Domestic Product

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

Employment

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

Retail sales rose 0.3 percent, a relief from the previous month’s decline.10

Industrial Production

Industrial output fell for the third time in the last four months, declining 0.8 percent.11

Housing

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 Price Index

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

Durable Goods Orders

Orders of goods designed to last three years or more moved higher by 0.6 percent, a rebound from their September decline.16

The Fed

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

By the Numbers