Bulls carry market into December
- Energy and tech soft, small caps retain strength
- Bonds rally as yields drop to six-week lows
- This week: Jobs, manufacturing and services data
Stocks wrapped up November in the holiday spirit, pushing to fresh record highs in a shortened week amid more market-friendly inflation and labor market data.
After closing above 6,000 for the first time last Tuesday, the S&P 500 (SPX) hit another all-time high on Friday to wrap up its best month (+5.7%) since last November:
Source: Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest in an index.)
The headline: No holiday for bulls.
The fine print: A lack of negative surprises helped the market enjoy another strong Thanksgiving week. Last Wednesday, another low weekly jobless claims total and moderate PCE Price Index inflation reading reinforced perceptions that the economy remains on solid ground.
The move: The benchmark 10-year Treasury yield fell 0.25 percentage points to 4.17% last week—its biggest weekly decline since July and its lowest close since October 18.
The scorecard: The Dow led the market last week, while the Russell 2000 (RUT) small-cap index, which was in negative territory for the year as recently as July, notched its third-biggest monthly return (+10.8%) since November 2020:
Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)
Sector returns: The strongest S&P 500 sectors last week were consumer discretionary (+2.3%), health care (+2.1%), and real estate (+2%). The weakest sectors were energy (-2%), tech (+0.2%), and materials (+0.7%).
Stock movers: On Monday, Arqit Quantum (ARQQ) +37% to $17.73, and Scholar Rock (SRRK) +26% to $37.72. On the downside, Cassava Sciences (SAVA) -84% to $4.30 on Monday, Symbotic (SYM) -36% to $23.995 on Wednesday.
Futures: January WTI crude oil (CLF5) fell $3.24 last week to $68, thanks mostly to last Monday’s 3% sell-off. February gold (GCG5) also fell more than 3% last Monday, ending the week down $56.20 at $2,681. Week’s biggest gains: March cocoa (CCH5) +9.2%, March coffee (KCH5) +7.6%. Week’s biggest declines: December VIX (VXZ4) -11.5%, March palladium (PAH5) -5.3%.
Coming this week
Jobs data highlights the first week of the new month:
●Monday: S&P Global Manufacturing, ISM Manufacturing Index, construction spending
●Tuesday: Job Openings and Labor Turnover Survey (JOLTS)
●Wednesday: ADP Private Employment, S&P Global Services PMI, ISM Services Index, factory orders, Fed Beige Book
●Thursday: job cuts, trade balance
●Friday: U.S. Employment Report
This week’s earnings include:
●Monday: Credo Technology (CRDO), Zscaler (ZS)
●Tuesday: Core & Main (CNM), G-III Apparel (GIII), Box (BOX), Salesforce (CRM), Marvell Technology (MRVL), Okta (OKTA), Pure Storage (PSTG)
●Wednesday: Cracker Barrel (CBRL), Chewy (CHWY), The Campbell's Company (CPB), Dollar Tree (DLTR), Foot Locker (FL), Thor Industries (THO), AeroVironment (AVAV), Five Below (FIVE), PVH (PVH)
●Thursday: Dollar General (DG), J. Jill (JILL), Kroger (KR), Land’s End (LE), Science Applications (SAIC), DocuSign (DOCU), Guidewire Software (GWRE), Gitlab (GTLB), Hewlett Packard Enterprise (HPE), Lululemon (LULU), Smartsheet (SMAR), Ulta Beauty (ULTA)
●Friday: Genesco (GCO)
Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.
December market trends
With the S&P 500 having wrapped up its seventh-best January–November return of the past 67 years, the odds favor 2024 ending as an above-average year, regardless of whether December turns out to be a good or bad month for stocks.
On a long-term basis, December has been one of the most reliably bullish months of the year, positive 73% of the time since 1957.1 The most recent decade has been more mixed, with the S&P 500 posting a positive return six times and suffering large sell-offs in 2018 and 2022:
Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation. Note: It is not possible to invest in an index.)
There’s not much evidence that strong Novembers, or strong January-November returns, tend to be followed by weak Decembers. Since 1957, the SPX gained more than 5% in November five other times, and three of the Decembers that followed had positive returns. The two that were negative, 2022 and 2002, occurred in years the SPX was down at least 14% through November. Similarly, of the seven other times the SPX was up 25% or more for the year through November, it had a positive December return five times.
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1 Figures reflect S&P 500 (SPX) monthly closing prices, 1957–2023. Supporting document available upon request.