Market sustains festive mood

  • Friday rally pushes market to new YTD high
  • Real estate outperforms again, tech cools
  • This week: Jobs, Factory Orders, Consumer Sentiment

The S&P 500 (SPX) wrapped up its second-strongest November in more than 40 years last Thursday, but for the first hour or so of trading on Friday, its fate for the week was very much in doubt.

The index was in negative territory for the day, threatening to snap a four-week winning streak. But around 11 a.m. ET—right around the time Fed Chair Jerome Powell kicked off a speech—the SPX found its footing, ultimately clinching a fifth-straight up week and closing at its highest level since March 2022:

Chart 1: S&P 500 (SPX), 10/25/23–12/1/23. S&P 500 (SPX) price chart. Friday rally extends streak.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest in an index.)

The headline: Broad market hits highest high in more than eight months.

The fine print: Last month made good on its reputation as one of the most bullish months of the year, even though it stalled a bit toward the end amid mixed economic data. The PCE Price Index showed inflation cooled in October and the ISM Manufacturing Index was flat month over month, but construction spending and GDP were both stronger than expected. Meanwhile, the market appeared to take Powell’s Friday comments in stride, even though he said it was “premature” to declare victory over inflation.1

The number: 5.2%, the upwardly revised Q3 GDP estimate released last Wednesday.

The move: Long-underperforming real estate stocks have shown signs of life recently. The S&P 500 real estate sector led the market over the past month, and got back into positive territory for the year with last week’s 4.6% gain.

The scorecard: Tech led the market in November, but the Nasdaq 100 (NDX) trailed the pack last week:

US stock index performance for week ending 12/1/23. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)

Sector returns: The strongest S&P 500 sectors last week were real estate (+4.6%), materials (+2.5%), and industrials (+2.1%). The weakest sectors were communication services (-2.5%), energy (-0.1%), and information technology (+0.3%).

Stock movers: Vivos Therapeutics (VVOS) +834% to $41 on Wednesday (then -40% to $24.50 on Thursday and -18.8% to $19.90 on Friday), Immunogen (IMGN) +83% to $29.35 on Thursday. On the downside, Cabaletta Bio (CABA) -27% to $13.69 on Tuesday, Arrowhead Pharmaceuticals (ARWR) -27% to $21.20 on Thursday.

Futures: After hitting a 12-day intraday high of $76.90 on Thursday, January WTI crude oil (CLF4) reversed to close lower on the day, then sold off on Friday to end the week with a loss at $74.07. February gold (GCF4) closed last week at $2,089.70—its highest level since May—thanks to big rallies on Tuesday and Friday. Week’s biggest gains: March coffee (KCH4) +9.6%, March hard red wheat (KWH4) +5.8%. Week’s biggest losses: March sugar (SBH4) -7%, March palladium (-6.8%).

Coming this week

The monthly jobs report highlights the first full week of December:

Monday: Factory Orders
Tuesday: S&P Global Services PMI, ISM Services Index, Job Openings and Labor Turnover Survey (JOLTS)
Wednesday: ADP Employment Change, Trade Balance, Productivity and Labor Costs
Thursday: Challenger Job Cut Report, Wholesale Inventories, Consumer Credit
Friday: Employment Report, Consumer Sentiment

Earnings this week include:

Monday: Science Applications (SAIC), Gitlab (GTLB)
Tuesday: AutoZone (AZO), J.M. Smucker (SJM), AeroVironment (AVAV), Toll Brothers (TOLL), HealthEquity (HQY), MongoDB (MDB)
Wednesday: Campbell Soup (CPB), Ollies Bargain Outlet (OLLI), United Natural Foods (UNFI), C3 AI (AI), Chewy (CHWY), Thor Industries (THO), Verint Systems (VRNT)
Thursday: Dollar General (DG), Broadcom (AVGO), DocuSign (DOCU), Lululemon (LULU), RH (RH), Smartsheet (SMAR)
Friday: Johnson Outdoors (JOUT)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

All quiet (too quiet?) on the VIX front

When the Cboe Volatility Index (VIX) fell to 12.45 on November 24, it was as low as the widely watched volatility barometer had been since January 2020. Last week the VIX didn’t move very far above that roughly four-year low, never closing higher than 12.98, and nearly matching it twice (including on Friday).

The VIX typically moves in the opposite direction of the stock market, declining when prices rise and climbing when prices fall—especially when they fall sharply, reflecting heightened expectations of further volatility. Since 1990, there have been 52 other scenarios similar to one in place on Friday, when the VIX spent most of the week near a long-term low.2 Twenty trading days later, the SPX was lower 28 out of 52 times, with an average return of -0.6%.

That runs counter not only to the SPX performance for all 20-day periods since 1990—higher 63% of the time, with a +0.7% average return—but also with the stock market’s historical tendency to gain ground in December.


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1 Fed Chair Powell calls talk of cutting rates ‘premature’ and says more hikes could happen.12/1/23.
2 Reflects S&P 500 (SPX) and Cboe Volatility Index (VIX) daily data, 1/2/90–12/1/23. The specific pattern refers to the VIX hitting its lowest low in at least one year, followed (over the next five trading days) at least two other day when the VIX traded with 0.15 of that low, including the most recent trading day. Supporting document available upon request.

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