Don’t Fight the Fed, redux
November brought an early surge of holiday spirit, with the S&P 500, Dow Jones Industrial Average, and Nasdaq delivering their most robust monthly gains of the year. This exceptional performance ranks as the second-best November in the past three decades.
As highlighted in last month’s summary, the Federal Reserve’s November 1st meeting revealed a more accommodative stance, reversing the October slide of both stocks and bonds. This rally has led to remarkable monthly performance for the markets, though we will again point out that the S&P 500’s dramatic rise remains fueled by the largest seven companies in the index.
This impressive outcome was partly driven by moderating inflation and, in part, the Treasury bond rally, which pushed the 10-year Treasury yield to a closing rate of 4.37% on November 30th, falling from its near-5% high in October. Recall that falling yields tend to help the value of both stocks and bonds – you can again thank the Federal Reserve for this momentum.
While this strong November rally carries an early holiday treat, it has been a long-awaited win for patient investors. Our chart of the month illustrates the potential rebound possibilities, and shows another reason why not to fight the Fed.
The views expressed represent the opinions of Tiller Private Wealth as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, https://adviserinfo.sec.gov. Past performance is not a guarantee of future results.
The market indices discussed are unmanaged. Investors cannot directly invest in unmanaged indices.
The Dow Jones Industrial Average is an unmanaged, price-weighted index of 30 blue-chip stocks. You cannot directly invest in this index.
The NASDAQ Composite Index is an unmanaged, market-weighted index of all over the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.
The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in this index.
Data sources: Clearnomics, YCharts, EdwardJones, Yahoo Finance, BankRate, US Federal Reserve and US Treasury Dept