Month: December 2023

The Markets (as of market close December 22, 2023)

Stocks notched their eighth straight week of gains heading into the holiday-shortened week. While trading was generally light, investors remained bullish toward stocks as traders clung to the hope that the economy has survived the restrictive inflation-reducing policy of the Federal Reserve. The S&P 500 enjoyed its longest weekly winning streak since late 2017, while the Nasdaq and the Dow marked the streaks since early 2019. With one week to go in 2023, the S&P 500 is within 1.0% of reaching its all-time high, achieved in January 2022. The Russell 2000, which was below its 2022 closing value in August, now is more than 15.0% above that level. Investors were also encouraged by economic data released last week, which showed inflation continuing to trend lower, while new orders for durable goods advanced, a good sign for corporations. Crude oil prices ticked higher but remained below $75.00 per barrel. Yields on 10-year Treasuries moved marginally lower, while the dollar weakened on declining interest rates.

Equities edged higher to begin last Monday in what was expected to be a week of modest trading leading up to the Christmas holiday. The Nasdaq led the benchmark indexes listed here, gaining 0.6%, while the S&P 500 rose 0.5%. The Dow was flat, the Russell 2000 and the Global Dow ticked down 0.1%. Megacaps performed well, while communication services and consumer staples led the market sectors. Ten-year Treasury yields inched up 2.6 basis points to 3.95%. Crude oil prices ended relatively flat, while the dollar and gold prices dipped lower.

Stocks jumped higher last Tuesday. The Dow achieved its fifth straight record close after gaining 0.7%. The Nasdaq and the Global Dow also rose 0.7%, while the S&P 500 gained 0.6%. The big winner, however, was the Russell 2000, which climbed 2.0%. Yields on 10-year Treasuries closed at 3.92% after falling 3.2 basis points. Crude oil prices continued to rally, gaining 1.5% to $73.58 per barrel. The dollar slipped 0.4%, while gold prices rose 0.6%.

Wall Street cooled last Wednesday as investors may have taken some gains following a record-setting rally. Each of the benchmark indexes listed here lost ground. The Russell 2000 fell 1.6%, while the S&P 500 and the Nasdaq each dropped 1.5%. The Dow declined 1.3% and the Global Dow dipped 0.8%. Bonds continued to advance, with yields on 10-year Treasuries falling 4.5 basis points to 3.87%. Crude oil prices slipped to $73.79 per barrel after declining 0.2%. The dollar edged up, while gold prices dipped lower.

Last Thursday saw stocks rebound as the Russell 2000 (1.7%), the Nasdaq (1.3%), and the S&P 500 (1.0%) each closed the session up by at least 1.0%. The Dow gained 0.9% and the Global Dow added 0.6%. Ten-year Treasury yields inched up less than 2.0 basis points to 3.89%. Crude oil prices slipped to $74.02 per barrel. The dollar fell 0.6%, while gold prices rose 0.4%.

Stocks closed generally higher last Friday. The Nasdaq and the S&P 500 ticked up 0.2%, the Russell 2000 added 0.1%, while the Global Dow and the Dow broke even. Ten-year Treasury yields changed little, closing at 3.90%. Crude oil prices dipped 0.4%. The dollar edged lower, while gold prices rose 0.7%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 12/22	Weekly Change	YTD Change
DJIA	33,147.25	37,305.16	37,385.97	0.22%	12.79%
Nasdaq	10,466.48	14,813.92	14,992.97	1.21%	43.25%
S&P 500	3,839.50	4,719.19	4,754.63	0.75%	23.83%
Russell 2000	1,761.25	1,985.13	2,033.96	2.46%	15.48%
Global Dow	3,702.71	4,285.04	4,315.12	0.70%	16.54%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	3.92%	3.90%	-2 bps	3 bps
US Dollar-DXY	103.48	102.61	101.73	-0.86%	-1.69%
Crude Oil-CL=F	$80.41	$71.62	$73.56	2.71%	-8.52%
Gold-GC=F	$1,829.70	$2,033.40	$2,064.20	1.51%	12.82%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• The third and final estimate of third-quarter gross domestic product showed the economy accelerated at an annualized rate of 4.9%. The second quarter GDP rose 2.1%. Personal consumption expenditures, the main driver of GDP, expanded at a rate of 3.1%. Consumer spending on goods increased 4.9%, while spending on services rose 2.2%. Overall fixed investment advanced 2.5%, with nonresidential fixed investment moving up 1.4%, while residential fixed investment increased 6.7%. Exports rose 5.4%, while imports, which are a negative in the calculation of GDP, advanced 4.2%. Consumer prices ticked up 2.6% in the third quarter, while prices less food and energy, rose 2.0%.
• Recent data continues to evidence declining inflation. The November personal consumption expenditures price index declined 0.1% last month after being flat in October. Core prices, excluding food and energy, inched up 0.1% in November following a 0.2% increase the previous month. More importantly, the overall price index and core prices declined over the 12 months ended in November. The PCE price index fell 0.4 percentage point to 2.6%, while core prices dipped 0.3 percentage point to 3.2%. In November, consumer spending rose 0.2%, after rising 0.1% in October. Personal income and disposable (after-tax) income rose 0.4% last month following a 0.3% increase in October.
• New home construction may be picking up. While the number of building permits issued in November for all residential construction declined 2.5% from the previous month, building permits were up 4.1% over the November 2022 estimate. The number of single-family housing permits rose 0.7% last month and 22.8% above the year earlier total. Housing starts in November were 14.8% above the October estimate and 9.3% over the November 2022 rate. Single-family housing starts were 18.0% above the October pace. Housing completions in November were 5.0% over the October estimate but 6.2% below the November 2022 rate. Housing completions in November for single family homes were 3.2% under the October rate.
• Sales of existing homes advanced 0.8% in November, the first monthly increase since May. However, sales were down 7.3% over the last 12 months. The median existing home sales price was $387,600 in November ($391,600 in October), up from $372,700 in November 2022. Inventory of available existing homes for sale sat at a 3.5-month supply. According to the National Association of Realtors®, the average 30-year fixed mortgage rate, at 6.95%, fell below 7.0% for the first time since August. Sales of existing single-family homes also rose in November after climbing 0.9%. Sales remained down, (-7.3%), from a year ago. The median existing single-family home price was $392,100 in November ($396,000 in October), up from $378,700 from a year ago. Inventory of existing single-family homes available for sale sat at a 3.5-month pace.
• Sales of new single-family homes dropped 12.2% in November and were up only 1.4% over the last 12 months. The decline in sales was likely due to rising mortgage rates in October and November. In addition, sales were uneven throughout the country, where sales in the South and West decreased 20.9% and 5.1%, respectively. Conversely, sales in the Midwest and Northeast advanced 25.0% and 3.1%, respectively. Inventory rose to a 9.2-month supply in November, up from 7.9 months in October and the highest since November 2022. The median sales price was $434,700 in November, up from $414,900 in October. The average sales price was $488,900, down from October’s price of $498,500.
• New orders for manufactured durable goods in November, up two of the last three months, rose 5.4% to $295.4 billion. Excluding transportation, new orders increased 0.5%. Excluding defense, new orders increased 6.5%. Transportation equipment, also up two of the last three months, led the increase, advancing 15.3%. New orders for nondefense capital goods in November increased 17.1%. New orders for defense capital goods in November decreased 12.0%.
• The national average retail price for regular gasoline was $3.053 per gallon on December 18, $0.083 per gallon lower than the prior week’s price and $0.067 less than a year ago. Also, as of December 18, the East Coast price decreased $0.073 to $3.050 per gallon; the Midwest price fell $0.103 to $2.798 per gallon; the Gulf Coast price declined $0.075 to $2.547 per gallon; the Rocky Mountain price dropped $0.091 to $2.808 per gallon; and the West Coast price decreased $0.086 to $4.055 per gallon.
• For the week ended December 16, there were 205,000 new claims for unemployment insurance, an increase of 2,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended December 9 was 1.3%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended December 9 was 1,865,000, a decrease of 1,000 from the previous week’s level, which was revised down by 10,000. States and territories with the highest insured unemployment rates for the week ended December 2 were New Jersey (2.3%), Alaska (2.2%), California (2.2%), Minnesota (1.9%), Puerto Rico (1.9%), Washington (1.9%), Hawaii (1.8%), Massachusetts (1.8%), Rhode Island (1.8%), and New York (1.7%). The largest increases in initial claims for unemployment insurance for the week ended December 9 were in Nevada (+329), Massachusetts (+298), Michigan (+279), Arizona (+259), and North Carolina (+173), while the largest decreases were in New York (-6,720), Pennsylvania (-4,311), Texas (-3,715), Kentucky (-3,707), and California (-3,618).

Eye on the Week Ahead

Christmas week is a slow one for the release of economic news. The advance report on international trade in goods for November is out toward the end of the week. The trade in goods deficit was $89.6 billion in October, largely due to a 1.4% decrease in exports.

The Markets (as of market close December 8, 2023)

The first week of December saw stocks close higher. Megacaps fueled much of the increase. A better-than-expected jobs report (see below) encouraged investor sentiment about a soft landing for the economy, while cooling expectations of an early cut in interest rates by the Federal Reserve. Each of the benchmark indexes listed here ended last week higher, with the exception of the Global Dow. Several market sectors advanced, led by consumer discretionary, real estate, industrials, communication services, and information technology. Energy, consumer staples, and materials lagged. Ten-year Treasury yields rode a wave of ebbs and flows during the week, ultimately closing about where they began. A late-week rally wasn’t enough to keep crude oil prices from falling for the sixth straight week. The dollar edged higher, while gold prices declined.

Wall Street began last week on a bit of a sour note. Megacaps retreated, dragging the Nasdaq down 0.8%. The S&P 500 fell 0.5%, the Global Dow lost 0.2%, and the Dow slipped 0.1%. The small caps of the Russell 2000 gained 1.0%. Communication services, information technology, and energy were the worst performing sectors. Ten-year Treasury yields rose 6.2 basis points to 4.28% as bond prices dipped. Crude oil prices fell nearly 1.0% to $73.34 per barrel. The dollar advanced, while gold prices declined.

Tech stocks helped boost the Nasdaq last Tuesday, while long-term bonds resumed their rally. Of the benchmark indexes listed here, only the Nasdaq closed higher, gaining 0.3%. The Russell 2000 (-1.4%), the Global Dow (-0.3%), the Dow (-0.2%), and the S&P 500 (-0.1%) ended the session lower. Ten-year Treasury yields shed 11.7 basis points, closing at 4.16%. Crude oil prices continued to tumble after falling 0.9% to close at $72.37 per barrel. The dollar gained 0.3%, while gold prices fell 0.2%.

Stocks tumbled lower for the third straight session last Wednesday. The Nasdaq (-0.6%) and the S&P 500 (-0.4%) declined the furthest among the benchmark indexes listed here, followed by the Dow and the Russell 2000, which dipped 0.2%. The Global Dow edged up 0.2%. Crude oil prices declined to the lowest levels since June after dropping 4.2% to $69.26 per barrel. Yields on 10-year Treasuries lost 5.0 basis points to close at 4.12%. The dollar ticked up for the second straight session, while gold prices advanced for the first time after falling three straight days.

Megacaps fueled a rebound in the markets last Thursday, with investors favoring artificial intelligence stocks. The Nasdaq closed up 1.4%, followed by the Russell 2000 (0.9%) and the S&P 500 (0.8%), while the Global Dow and the Dow gained 0.2%. Ten-year Treasury yields closed where they began at 4.12%. Crude oil prices inched up about $0.40 to $69.66 per barrel. Both the dollar and gold prices slid lower.

Stocks closed higher last Friday with the small caps of the Russell 2000 leading the way after gaining 0.8%. The Nasdaq rose 0.5%, while the Dow and the S&P 500 advanced 0.4%. The Global Dow ticked up 0.1%. Crude oil prices were boosted by a minor rally, gaining about 2.7% to close above $71.00 per barrel. Ten-year treasury yields jumped 11.6 basis points, closing at 4.24%. The dollar gained 0.4%, while gold prices fell 1.4%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 12/8	Weekly Change	YTD Change
DJIA	33,147.25	36,245.50	36,247.87	0.01%	9.35%
Nasdaq	10,466.48	14,305.03	14,403.97	0.69%	37.62%
S&P 500	3,839.50	4,594.63	4,604.37	0.21%	19.92%
Russell 2000	1,761.25	1,862.64	1,880.82	0.98%	6.79%
Global Dow	3,702.71	4,195.74	4,191.86	-0.09%	13.21%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.22%	4.24%	2 bps	37 bps
US Dollar-DXY	103.48	103.22	103.98	0.74%	0.48%
Crude Oil-CL=F	$80.41	$74.31	$71.25	-4.12%	-11.39%
Gold-GC=F	$1,829.70	$2,090.80	$2,019.40	-3.41%	10.37%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• According to the latest jobs report from the Bureau of Labor Statistics, there were 199,000 new jobs added in November, up from 150,000 new jobs added in October. Nevertheless, employment growth was below the average monthly gain of 240,000 over the prior 12 months but is in line with job growth in recent months. Job gains occurred in health care and government. Employment also increased in manufacturing, reflecting the return of workers from a strike. Employment in retail trade declined. The November unemployment rate edged down 0.2 percentage point to 3.7%. The total number of unemployed declined by 215,000 to 6.3 million. The employment-population ratio increased by 0.3 percentage point to 60.5% in November. The labor force participation rate was little changed at 62.8% and has been essentially flat since August. In November, average hourly earnings rose by $0.12, or 0.4%, to $34.10. Over the past 12 months, average hourly earnings have increased by 4.0%. The average workweek edged up by 0.1 hour to 34.4 hours in November. The change in employment for September was revised down by 35,000, from 297,000 to 262,000, while the change for October remained at 150,000. With these revisions, employment in September and October combined was 35,000 lower than previously reported.
• According to the latest Job Openings and Labor Turnover Summary, the number of job openings decreased 617,000 to 8.7 million in October. Over the month, job openings decreased in health care and social assistance (-236,000), finance and insurance (-168,000), and real estate and rental and leasing (-49,000). Job openings increased in information (+39,000). The number of hires dipped 18,000 to 5.9 million. The number of total separations was little changed in October from September. The October number of quits, layoffs, and discharges was relatively unchanged from the previous month.
• The latest report on international trade in goods and services was released on December 6 and is for October. The goods and services deficit was $64.3 billion, up 5.1% from the previous month. Exports fell 1.0%, while imports rose 0.2%. Year to date, the goods and services deficit decreased $161.4 billion, or 19.8%, from the same period in 2022. Exports increased $28.0 billion, or 1.1%. Imports decreased $133.4 billion, or 4.0%. The third quarter showed trade surpluses, in billions of dollars, with South and Central America ($21.8), Netherlands ($14.6), Australia ($8.3), Singapore ($6.8), Hong Kong ($6.6), Brazil ($4.8), Belgium ($3.3), United Kingdom ($3.1), Saudi Arabia ($2.0), and Switzerland ($1.6). Trade deficits, in billions of dollars, were reported with China ($63.8), Mexico ($39.1), European Union ($26.5), Vietnam ($26.2), Germany ($20.5), Japan ($14.9), Taiwan ($12.8), South Korea ($11.5), India ($11.5), Italy ($10.9), Canada ($10.0), Malaysia ($5.5), France ($4.2), Ireland ($4.1), and Israel ($2.2).
• Business activity in the services sector expanded marginally in November. The S&P Global US Services PMI Business Activity Index posted 50.8 in November, up from October’s 50.6. Survey respondents noted a minimal increase in new orders following a three-month decline as new business from abroad ticked up. Employment rose at the weakest pace in over a year. Costs to services providers eased to the slowest rate in over three years, largely attributable to waning inflation.
• The national average retail price for regular gasoline was $3.231 per gallon on December 4, $0.007 per gallon lower than the prior week’s price and $0.159 less than a year ago. Also, as of December 4, the East Coast price increased $0.051 to $3.206 per gallon; the Midwest price fell $0.040 to $2.991 per gallon; the Gulf Coast price rose $0.028 to $2.738 per gallon; the Rocky Mountain price dropped $0.091 to $3.015 per gallon; and the West Coast price decreased $0.111 to $4.252 per gallon.
• For the week ended December 2, there were 220,000 new claims for unemployment insurance, an increase of 1,000 from the previous week’s level, which was revised up by 1,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 25 was 1.2%, a decrease of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 25 was 1,861,000, a decrease of 64,000 from the previous week’s level, which was revised down by 2,000. States and territories with the highest insured unemployment rates for the week ended November 18 were New Jersey (2.1%), Alaska (2.0%), California (1.8%), Hawaii (1.7%), Puerto Rico (1.7%), Massachusetts (1.6%), New York (1.6%), Oregon (1.6%), Rhode Island (1.6%), Pennsylvania (1.5%), and Washington (1.5%). The largest increases in initial claims for unemployment insurance for the week ended November 25 were in Wisconsin (+1,750), Kansas (+1,194), Ohio (+1,130), Pennsylvania (+609), and Idaho (+525), while the largest decreases were in California (-14,223), Texas (-5,560), Oregon (-2,980), Florida (-2,234), and New York (-2,073).

Eye on the Week Ahead

There’s plenty of important data being released this week. The Federal Open Market Committee meets for the last time this year. The FOMC hasn’t increased interest rates since July, however, they have left the door open for more rate hikes should inflation reverse course and accelerate. Speaking of inflation, several inflationary indicators are out this week. The Consumer Price Index for November is available. The CPI was unchanged in October and saw its annual rate drop from 3.7% to 3.2%. The Producer Price Index, also out this week, fell 0.5% in October.

The Markets (as of market close December 1, 2023)

The markets continued to flourish last week. Investors were not deterred by a warning from Federal Reserve Chair Jerome Powell that interest rate hikes may not be over, and it is premature to speculate when rate decreases will begin. The S&P 500 and the Dow reached new 2023 highs, while the Nasdaq posted solid returns as all three indexes extended a run of five straight weekly gains. Despite additional output cuts by OPEC+, crude oil prices continued to lag as demand remained soft. Ten-year Treasury yields closed down nearly 80.0 basis points from a peak in October. Yields fell over 50.0 basis points in November, marking the largest monthly decline since August 2019. The dollar weakened, while gold prices finished the week at a record high.

Stocks edged lower last Monday as investors may have spent more time focused on Cyber Monday deals rather than stock market bargains. Each of the benchmark indexes listed here slipped marginally lower, with the Russell 2000 (-0.3%) falling the furthest, followed by the Global Dow and the S&P 500 (-0.2%), while the Dow (-0.2%) and the Nasdaq (-0.1%) also ticked lower. Long-term bond prices rose, pulling yields on 10-year Treasuries down 8.3 basis points to 4.38%. Crude oil prices dipped 0.7%, settling at around $75.00 per barrel. The dollar declined 0.2%, while gold prices rose 0.6%.

Last Tuesday saw stocks recoup losses from the prior day, while bond yields continued to decline. Among the benchmark indexes listed here, only the Russell 2000 closed in the red, falling 0.5%. The Global Dow advanced 0.4%, the Nasdaq rose 0.3%, the Dow climbed 0.2%, and the S&P 500 inched up 0.1%. Ten-year Treasury yields settled at 4.33% after falling 5.3 basis points. Crude oil prices rose 2.0% to $76.37 per barrel. The dollar fell 0.4%, while gold prices gained 1.5%, advancing for the second straight day.

Stocks closed mostly lower last Wednesday. Among the benchmark indexes listed here, only the Russell 2000 (0.6%) advanced, with the Dow and the Global Dow unchanged. The Nasdaq and the S&P 500 dipped 0.1%. Stocks began the day on an upswing as investor hopes for a strengthening economy got a boost by solid third-quarter gross domestic product data (see below). By the close of trading, most of the morning’s gains were lost. Bonds continued to rally as yields on 10-year Treasuries lost 6.5 basis points to settle at 4.27%. Crude oil prices advanced for the second straight day, climbing 1.7% to $77.70 per barrel. The dollar and gold prices advanced.

Wall Street posted solid gains last Thursday to close out a strong November. Among the benchmark indexes listed here, only the Nasdaq ended the session in the red, down 0.2%. The remaining indexes added value, led by the Dow (1.5%), followed by the S&P 500 and the Global Dow (0.4%), while the Russell 2000 edged up 0.3%. Bond prices, which had been surging, slid lower, driving yields higher. Ten-year Treasury yields closed at 4.35% after adding 8.1 basis points. Crude oil prices fell 2.8% to $75.67 per barrel despite an announced cut in production by OPEC+. The dollar gained 0.7%, while gold prices fell 0.5%.

Stocks closed last Friday on an upswing, closing higher for the fifth straight week. The Russell 2000 enjoyed the best returns after gaining 2.8%, followed by the large caps of the Dow, which added 0.8%, the Global Dow rose 0.7%, while the Nasdaq and the S&P 500 gained 0.6%. Bond prices surged with yields on 10-year Treasuries falling 12.6 basis points to 4.22%. Crude oil prices declined 2.3%, the dollar fell 0.3%, while gold prices rose 1.6%.

Stock Market Indexes

Market/Index	2022 Close	Prior Week	As of 12/1	Weekly Change	YTD Change
DJIA	33,147.25	35,390.15	36,245.50	2.42%	9.35%
Nasdaq	10,466.48	14,250.85	14,305.03	0.38%	36.67%
S&P 500	3,839.50	4,559.34	4,594.63	0.77%	19.67%
Russell 2000	1,761.25	1,807.50	1,862.64	3.05%	5.76%
Global Dow	3,702.71	4,144.28	4,195.74	1.24%	13.32%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.47%	4.22%	-25 bps	35 bps
US Dollar-DXY	103.48	103.40	103.22	-0.17%	-0.25%
Crude Oil-CL=F	$80.41	$75.54	$74.31	-1.63%	-7.59%
Gold-GC=F	$1,829.70	$2,003.00	$2,090.80	4.38%	14.27%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• The economy accelerated at an annualized rate of 5.2% in the third quarter, according to the second estimate of gross domestic product. GDP rose 2.1% in the second quarter. The increase in GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, residential fixed investment, and nonresidential fixed investment. Imports, which are a negative in the calculation of GDP, increased. The personal consumption expenditures price index increased 2.8%. Excluding food and energy prices, the PCE price index increased 2.3%. Personal consumption expenditures, a major component in the calculation of GDP, rose 3.6% in the third quarter, compared to a 0.8% increase in the second quarter.
• The personal consumption expenditures price index, the Federal Reserve’s preferred measure of inflation, increased less than 0.1% in October. Excluding food and energy, the PCE price index rose 0.2%. For the 12 months ended in October, the PCE price index rose 3.0%, 0.4 percentage point lower than the 12-month period ended in September. The PCE price index excluding, food and energy, increased 3.5% since October 2022, down from 3.7% for the 12 months ended in September. Personal income increased 0.2% in October. Disposable (after-tax) personal income increased 0.3%. Personal consumption expenditures, a measure of consumer spending, increased 0.2% in October.
• Sales of new single-family homes fell by 5.6% in October but were 17.7% above the October 2022 estimate. The median sales price of new houses sold in October 2023 was $409,300. The average sales price was $487,000.  Inventory of new single-family homes for sale was at a 7.8-month supply at the current sales pace.
• A decline in new orders dragged manufacturing lower in November, according to the latest S&P Global US Manufacturing PMI®. Purchasing managers noted that a drop in new sales led to a slower expansion in production, which led to a reduction in the labor force. The S&P US Manufacturing Purchasing Managers’ Index™ registered 49.4 in November, down from 50.0 in October. A reading of less than 50.0 indicates contraction in manufacturing.
• The advance report on international trade in goods showed a trade deficit of $89.8 billion in October, an increase of 3.4% over the September deficit. Exports of goods for October were $170.8 billion, a decrease of 1.7% from the previous month. Imports of goods for October were $260.7 billion, virtually unchanged from the September estimate.
• The national average retail price for regular gasoline was $3.238 per gallon on November 27, $0.051 per gallon lower than the prior week’s price and $0.296 less than a year ago. Also, as of November 27, the East Coast price decreased $0.011 to $3.155 per gallon; the Midwest price fell $0.093 to $3.031 per gallon; the Gulf Coast price declined $0.076 to $2.710 per gallon; the Rocky Mountain price dropped $0.091 to $3.106 per gallon; and the West Coast price decreased $0.054 to $4.363 per gallon.
• For the week ended November 25, there were 218,000 new claims for unemployment insurance, an increase of 7,000 from the previous week’s level, which was revised up by 2,000. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended November 18 was 1.3%, an increase of 0.1 percentage point from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended November 18 was 1,927,000, an increase of 86,000 from the previous week’s level, which was revised up by 1,000. This is the highest level for insured unemployment since November 27, 2021, when it was 1,964,000. States and territories with the highest insured unemployment rates for the week ended November 11 were New Jersey (2.2%), California (2.1%), Alaska (2.0%), Hawaii (1.9%), Puerto Rico (1.7%), Washington (1.7%), Massachusetts (1.6%), New York (1.6%), Oregon (1.6%), and Rhode Island (1.6%). The largest increases in initial claims for unemployment insurance for the week ended November 18 were in California (+7,351), Oregon (+3,461), Kentucky (+1,925), Illinois (+1,359), and Iowa (+1,182), while the largest decreases were in Texas (-896), New York (-616), North Carolina (-537), Utah (-487), and Indiana (-447).

Eye on the Week Ahead

Economic data released during the first full week of December focuses on employment. The latest Job Openings and Labor Turnover Survey is for October. The previous report estimated 9.6 million job openings available in September, relatively unchanged from the prior month’s total. This week, focus will also be aimed at the latest employment situation report for November. Employment has showed signs of slowing, with an estimate of 150,000 new jobs added in October, well below the downwardly revised September total of 297,000.

The Markets (as of market close November 30, 2023)

Stocks rose notably in November following three straight months of declines. The Nasdaq led the benchmark indexes listed here, followed by the S&P 500, the Russell 2000, the Dow, and the Global Dow. Overall, indexes enjoyed their best month since late 2022 and the best November in three years. Signs of waning inflationary pressure powered investor optimism that the Federal Reserve may be done raising interest rates.

The most recent inflation data showed price growth slowed in October. Both the Consumer Price Index and the personal consumption expenditures price index showed annual rates of inflation receded (see below).

The Federal Reserve met in November and maintained the federal funds target rate range at its current 5.25%-5.50%. While noting that inflation appears to be slowing, the Fed left future interest rate hikes on the table should inflation turn less favorable. The Fed next meets in mid-December. It will be interesting to see whether some of the members hint at a possible interest rate reduction heading into 2024. However, while inflation has begun to trend lower, it remains above the Fed’s target of 2.0% and the economy has shown resiliency, all of which supports the Fed’s apparent cautious approach.

The economy has proven resilient despite an autoworkers strike, the ongoing war in Ukraine, and the Israel-Hamas conflict. Third-quarter gross domestic product expanded at an annualized rate of 5.2%, according to the second estimate. Consumer spending, which makes up about 70.0% of the economy, rose, with increased spending in durable goods, nondurable goods, and services. Gross domestic income rose 1.5% in the third quarter. Rising income should help expand the economy moving into the fourth quarter.

Job growth slowed in October, with only 150,000 new jobs added. Wages continued to rise, increasing 4.1% over the last 12 months. Along with declining job growth, unemployment claims increased from a year ago (see below), reaching their highest level since late 2021.

The third quarter saw U.S. companies enjoy their biggest year-over-year gain in earnings since the second quarter of 2022. With almost all of the S&P 500 companies reporting, overall earnings are estimated to be more than 6.0% above earnings totals from a year ago. More than 80.0% of quarterly reports exceeded analysts’ earnings expectations. In addition, third-quarter corporate profits in the U.S. surpassed the previous quarter by 4.1%, according to Trading Economics.

Sales of both new and existing homes retreated in October, primarily due to lack of inventory, high prices, and advancing mortgage rates. Sales of existing homes are down nearly 14.5% over the past 12 months, although sales of new single-family homes have increased nearly 18.0%.

Industrial production contracted in October following two months of gains. (see below). Conversely, manufacturing expanded in October, according to the latest survey from the S&P Global US Manufacturing Purchasing Managers’ Index™, driven by an increase in new orders. The services sector also saw business accelerate in October.

Ten of the 11 market sectors ended November higher, with the exception of energy, which fell about 1.7%. Last month saw real estate, information technology, financials, communication services, and consumer discretionary climb by more than 11.0%.

Bond prices advanced in November, with the 10-year Treasury bond enjoying its best month since 2011. Investors are hedging their bets that the Federal Reserve is through hiking interest rates. Ten-year Treasury yields dropped notably, while the 2-year Treasury yield fell nearly 27.0 basis points to about 4.70% in November. The dollar inched higher against a basket of world currencies. Gold prices hit record highs following a slip in bond yields and a weakening of the U.S. dollar. Crude oil prices declined in November despite the turmoil in the Middle East and additional output cuts collectively agreed to by OPEC+. The retail price of regular gasoline was $3.238 per gallon on November 27, $0.295 under the price a month earlier and $0.296 lower than a year ago.

Stock Market Indexes

Market/Index	2022 Close	Prior Month	As of November 30	Monthly Change	YTD Change
DJIA	33,147.25	33,052.87	35,950.89	8.77%	8.46%
Nasdaq	10,466.48	12,851.24	14,226.22	10.70%	35.92%
S&P 500	3,839.50	4,193.80	4,567.80	8.92%	18.97%
Russell 2000	1,761.25	1,662.28	1,809.02	8.83%	2.71%
Global Dow	3,702.71	3,852.70	4,161.18	8.01%	12.38%
Fed. Funds target rate	4.25%-4.50%	5.25%-5.50%	5.25%-5.50%	0 bps	100 bps
10-year Treasuries	3.87%	4.87%	4.35%	-52 bps	48 bps
US Dollar-DXY	103.48	106.70	103.50	-3.00%	0.02%
Crude Oil-CL=F	$80.41	$81.31	$75.67	-6.94%	-5.89%
Gold-GC=F	$1,829.70	$1,992.80	$2,056.00	3.17%	12.37%

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark the performance of specific investments.

Latest Economic Reports

• Employment: Employment rose by 150,000 in October from September following downwardly revised totals for August (227,000 to 165,000) and September (336,000 to 297,000). With these revisions, employment in August and September combined was 101,000 lower than previously reported. Over the last 12 months ended in October, the average monthly job gain was 258,000. In October, job gains occurred in health care, government, and social assistance. Employment in manufacturing declined due to worker strike activity. The unemployment rate ticked up 0.1 percentage point to 3.9% in October, while the number of unemployed persons rose by 146,000 to 6.5 million. The employment-population ratio dipped 0.2 percentage point to 60.2%, and the labor force participation rate decreased 0.1 percentage point to 62.7%. In October, average hourly earnings increased by $0.07, or 0.2%, to $34.00. Over the 12 months ended in October, average hourly earnings rose by 4.1%. In October, the average workweek edged down 0.1 hour to 34.3 hours.
• There were 218,000 initial claims for unemployment insurance for the week ended November 25, 2023. The total number of workers receiving unemployment insurance was 1,927,000. By comparison, over the same period last year, there were 213,000 initial claims for unemployment insurance, and the total number of claims paid was 1,554,000.
• FOMC/interest rates: The Federal Open Market Committee left the federal funds target rate unchanged following its meeting in November. The statement following the meeting indicated that, “The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”
• GDP/budget: The economy accelerated at a notable pace in the third quarter, as gross domestic product increased 5.2%, according to the second estimate. GDP increased 2.1% in the second quarter. The increase in third-quarter GDP compared to the previous quarter primarily reflected a rise in consumer spending and private inventory investment, and an upturn in exports that were partly offset by a deceleration in nonresidential fixed investment. Imports, which are a negative in the calculation of GDP, were up. Nonresidential fixed investment rose 1.3% in the third quarter compared to a 7.4% increase in the second quarter. Residential fixed investment rose 6.2% in the third quarter after declining 2.2% in the prior quarter. Third-quarter GDP saw exports increase 6.0% (-9.3% in the second quarter). Imports rose 5.2% in the third quarter after dropping 7.6% in the second quarter. Consumer spending, as measured by personal consumption expenditures, rose 3.6% in the third quarter, compared to a 0.8% increase in the second quarter. The increase in personal consumption expenditures reflected increases in goods (4.7%) and services (3.0%). Consumer prices increased 2.8% in the third quarter compared to a 2.5% advance in the second quarter. Excluding food and energy, consumer prices advanced 2.3% in the third quarter (3.7% in the second quarter).
• The federal budget had a deficit of $67.0 billion in October, the first month of fiscal year 2024. Government receipts were $403.4 billion in October, while expenditures totaled $470.0 billion. Compared to October 2022, the monthly deficit was $87.9 billion, receipts were $318.5 billion, and expenditures were $406.4 billion.
• Inflation/consumer spending: According to the latest Personal Income and Outlays report, inflation continued to wane. Consumer prices, as measured by the personal consumption expenditures price index, rose less than 0.1% in October after climbing 0.4% in both August and September. Consumer prices, excluding food and energy, (core prices) increased 0.2% in October, down from 0.3% in September. Over the 12 months ended in October, consumer prices increased 3.0%, (3.4% for the 12 months ended in September). Core prices rose 3.5% for the year ended in October, down from 3.7% for the 12 months ended in September. Over the last 12 months, prices for goods increased 0.2% and prices for services increased 0.4%. Food prices increased 2.4%, and energy prices decreased 4.8%. Consumer spending increased 0.2% in October (0.7% in September). Personal income advanced 0.2% in October, down from 0.4% in September. Disposable personal income rose 0.3% in October after climbing 0.4% in September.
• The Consumer Price Index was unchanged in October compared to a 0.4% advance in September. Over the 12 months ended in October, the CPI advanced 3.2%, down from 3.7% for the 12 months ended in September. Core prices, excluding food and energy, rose 0.2% in October and 4.1% over the last 12 months. Prices for shelter were the largest contributors to the monthly all items increase, offsetting a notable decrease in energy prices. Gasoline prices fell 5.0% in October, while prices for food rose 0.3%. For the 12 months ended in October, food prices rose 3.3%; shelter prices increased 6.7%; energy prices dipped 4.5%; and gasoline prices declined 5.3%.
• Prices that producers received for goods and services decreased 0.5% in October after rising 0.4% in September. The October decline is the largest since April 2020. Producer prices increased 1.3% for the 12 months ended in October. Prices for goods fell 1.4% in October, marking the first monthly decrease since May 2023. Over 80.0% of the broad-based October decline in prices for goods was attributable to a 15.3% drop in prices for gasoline. Prices for foods decreased 0.2%. Prices for services were unchanged in October from the previous month, following six consecutive monthly increases. Prices for services rose 1.3% from October 2022.
• Housing: Sales of existing homes decreased 4.1% in October, marking the fifth consecutive month of declines. Since October 2022, existing-home sales dropped 14.6%. According to the report from the National Association of Realtors®, limited inventory and housing affordability continued to hamper home sales. In October, total existing-home inventory sat at a 3.6-month supply at the current sales pace, up from 3.4 months in September. The median existing-home price was $391,800 in October, down from the September price of $392,800 but well above the October 2022 price of $378,800. Sales of existing single-family homes dropped 14.2% in October and 14.6% from a year ago. The median existing single-family home price was $396,100 in October, down from the September price of $397,400 but above the October 2022 price of $384,600.
• New single-family home sales fell 5.6% in October, after advancing 12.3% in September. Overall, single-family home sales were up 17.7% from a year earlier. The median sales price of new single-family houses sold in October was $409,300 ($422,300 in September). The October average sales price was $487,000 ($515,400 in September). The inventory of new single-family homes for sale in October increased to 7.8 months, up from 7.2 months in September.
• Manufacturing: Industrial production declined 0.6% in October after advancing 0.1% in September (revised). Manufacturing output fell 0.7% in October, mainly due to a 10% drop in the output of motor vehicles and parts, impacted by strikes at several major manufacturers. Manufacturing, excluding motor vehicles and parts, edged up 0.1% but was 1.7% below its year-earlier level. In October, mining increased 0.4%, while utilities decreased 1.6%. Total industrial production in October was 0.7% below its year-earlier level.
• New orders for durable goods, down three of the last four months, decreased 5.4% in October after increasing 4.0% in September. Excluding defense, new orders increased 5.8%. Excluding transportation, new orders were virtually unchanged. Transportation equipment, also down three of the last four months, drove the overall decline in durable goods orders, falling 14.8%. New orders for nondefense capital goods declined 15.6% in October, while defense orders increased 24.5%.
• Imports and exports: October saw both import and export prices decrease. Import prices declined 0.8% following a 0.4% increase in September. The decrease in imports was the first monthly drop since June 2023 and was the largest one-month decrease since March 2023. Prices for imports declined 2.0% for the year ended in October. Lower prices in October for both petroleum and natural gas contributed to the decrease in fuel prices. Import fuel prices fell 11.2% from October 2022 to October 2023. Import petroleum prices declined 6.5% in October following a 6.8% increase in September and an 8.9% advance in August. Nonfuel import prices declined 0.2% for the third consecutive month in October. Export prices fell 1.1% in October following a 0.5% increase in September. The decline in October was the largest monthly drop since May 2023. Lower prices for nonagricultural and agricultural exports each contributed to the October decline. Export prices fell 4.9% for the year ended in October.
• According to the advance report, the international trade in goods deficit increased $3.0 billion, or 3.4%, in October. Exports of goods decreased 1.7% from September, while imports of goods in October were virtually unchanged from the previous month.
• The latest information on international trade in goods and services, released November 7, was for September and revealed that the goods and services trade deficit increased $2.9 billion, or 4.9%, from August. Exports for September rose 2.2% from the previous month. Imports increased 2.7%. Year to date, the goods and services deficit decreased $147.4 billion, or 20.0%, from the same period in 2022. Exports increased 1.0%, while imports decreased 4.2%.
• International markets: Inflation is showing signs of cooling in other parts of the globe. Eurozone inflation declined 2.4% for the 12 months ended in November, its lowest level since July 2021. The United Kingdom saw its 12-month rate of inflation drop from 6.7% in September to 4.6% in October. Inflation in Germany dipped from 3.8% to 3.2%. Japan saw its annual rate of inflation rise from 3.0% to 3.3%. China’s gross domestic profit rose 1.3% over the last quarter. However, the annual rate of economic growth in China fell from 6.3% to 4.9% as factory output continued to decline, while consumer spending on services fell for the first time this year. For November, the STOXX Europe 600 Index increased 4.1%; the United Kingdom’s FTSE 100 ticked up 0.1%; Japan’s Nikkei 225 Index rose 4.8%; and China’s Shanghai Composite Index gained 0.7%.
• Consumer confidence: According to the Conference Board Consumer Confidence Index®, consumer confidence increased in November to 102.0, up from a downwardly revised 99.1 in October. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, ticked down to 138.2 in November from 138.6 in the previous month. The Expectations Index, based on consumers’ short-term outlook for income, business, and labor market conditions, rose to 77.8 in November from 72.7 in October.

Eye on the Month Ahead

Entering the last month of the year, much of the focus will be on the economy and inflation. Recent data has shown that the economy has weathered the aggressive interest-rate policy adopted by the Federal Reserve. However, inflation has shown definite signs of slowing, enough to further hopes that the Fed will begin lowering interest rates in 2024.