Markets, Economy

Weekly Kickstart (12/02/2019-12/06/2019)

12/2/19 8:00 AM

iStock-626627280.jpgThe market rally resumed last week, as the S&P 500 rose by 0.99 percent to 3,140.98. That left the benchmark index up 25.30 percent 2019-to-date, and just 0.40 percent below the new all-time closing high hit on Wednesday. This YTD gain is the largest since 2013 but it is worth reiterating that as extended as equities may appear at the moment, major indices at best are only around 8 percent above last year’s highs. As for performance during the month of November, the S&P 500 rose by 3.40 percent, the third increase in a row and the largest since June. Looking ahead, there have been nearly two dozen other occasions since 1928 that the S&P 500 has been up at least 20 percent through the first eleven months of the year. Seventy-five percent of these rallies continued in December, with an average increase of 2.60 percent.


Further, when the S&P 500 was up at least 20 percent through the first eleven months of the year, the broad index finished the first quarter of the following year higher (relative to November’s closing price) 80 percent of the time since 1928, with an average gain of 7.83 percent. Strength clearly appears to beget strength in the stock market, but even with the favorable seasonality past performance does not guarantee future results, and the S&P 500 has already rallied for seven of the past eight weeks despite there still being a lot of uncertainty surrounding the trade war, the upcoming primary elections, and other important issues. All of this means that even if equities continue higher it will not necessarily be smooth sailing for the markets. Many savvy 401(k) investors, though, are perhaps less concerned about these potential near-term volatility catalysts because they understand that what really matters when building a retirement nest egg is the combination of consistent saving and a long time horizon. Additional assistance in achieving one’s old-age financial goals is available by regularly consulting with a professional advisor and as always, we are here to help with any questions you may have.


To recap a few of the things we learned about the economy last (holiday-shortened) week, the positives included that the nation’s trade deficit (in goods) narrowed, mortgage applications rose, new home sales firmed, initial jobless claims declined, consumer spending remained solid, core household inflation pressures eased, third quarter GDP growth was revised higher, demand for American-made durable goods rebounded, and an important measure of business investment surged. As for the negatives, housing inflation picked up, pending home sales fell, wage gains moderated, Americans’ confidence cooled, and gauges of regional manufacturing activity continued to send mixed signals. This week the pace of economic data remains elevated with several important reports on factory output, consumers, the U.S. service sector, and employment scheduled to be released, including the potentially market-moving November job report from the Labor Department due out on Friday.


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Sources: Econoday, FRBSL

Post author: Charles Couch