HWM Market Recap - November 2024
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This year has been marked by significant political and economic events, and many of you may feel uncertain about what lies ahead. As emotions continue to run high following last week’s election results, reactions are understandably varied. Moreover, the economy is still recovering from the effects of the global pandemic, and there are heightened geopolitical tensions worldwide. Historically, the U.S. stock market has risen regardless of the party in office. Our focus, however, remains the same every election cycle – we must remember to vote with our ballots, not our life savings.
We remain fully confident in the long-term prospects of the stock market. While U.S. stocks snapped their five-month winning streak in October, they have maintained solid gains since the start of the year. The S&P 500 has made impressive gains over the last two years, marking the third-fastest start to a bull market since the 1940s. Interestingly, the two bull markets that started faster (1974 and 2009) began after substantial bear markets – the kind of declines we have not really seen since. Historically, such beginnings indicate a positive outlook, though, as always, the future holds some unknowns.
But it sure has been an incredible start, and this year’s performance is a big part of that return. Since January, this has been the best-performing market since 1997 and the 13th best in history.
Underlying the market’s resilience, the economy has shown steady growth. Since the fourth quarter of 2022, U.S. GDP has expanded from $26 trillion to $29 trillion, an approximate 8% increase. This upward trajectory reminds us that while markets are naturally cyclical, they also tend to recover and grow over time. The median bull market since 1950 has lasted about five years, thus giving us reason to believe there could still be room to run in this cycle.
As optimistic as we are about the long-term outlook for markets, we also understand it can be challenging to keep a historical perspective amidst elections, news alerts, and commentary. The information landscape is noisy, but in both politics and investing, it is essential to separate the meaningful information from the noise. History shows us that markets have continued to progress, regardless of election outcomes – a point we covered in greater depth in our July newsletter.
It can be tempting to make significant adjustments to your investments based on what appear to be market responses to political events. Nevertheless, economic fundamentals drive long-term market performance, not election results. In times like these, it is crucial to ground decisions in evidence rather than on speculation, trusting in a strategy that has proven resilient through varied political and economic climates.
If recent events have left you feeling anxious about your investments, reach out to us to talk about current events in light of your portfolio. Our commitment is to help you develop and maintain a plan you can trust through all market conditions. We are here to answer any questions, provide guidance, and help you stay focused on what matters for your financial future.
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Monthly Changes in Indices
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Monthly Performance By Sector
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Interest Rates: As expected, the Federal Open Market Committee (FOMC) reduced the federal funds rate by 25 basis points (0.25%). The unanimous decision to cut rates this month follows a more substantial 0.50% cut in September. Moving forward, the Federal Reserve has indicated a preference for a cautious approach to further rate adjustments while it continues to focus on its dual mandate of supporting employment and price stability.
Inflation: September’s Consumer Price Index (CPI) came in slightly higher than expected. Headline CPI rose 2.4% for the twelve months ending in September, while Core CPI (which excludes food and energy) reached 3.3% annually, largely due to rising shelter costs, car insurance, apparel, and medical care expenses. The Personal Consumption Expenditures Price Index (PCE) came in at 2.1% for September, which was as expected and down from 2.3% in August. Meanwhile, Core PCE (the Fed’s primary measure of inflation, which excludes food and energy) stayed stubbornly at 2.7% annually and remained above the Fed’s 2% target.
Housing: As reported by the National Association of Realtors, existing-home sales decreased by 1% in September month-over-month (down 3.5% from a year ago). The median existing-home sales price increased 3% from a year ago to $404,500 – the 15th consecutive month of year-over-year price increases. Sales of new single-family homes in September 2024 rose 4.1% from the month before and 6.3% from the year prior. The median sales price of new houses sold in September 2024 was $426,300.
Mortgage Rates: As of November 7th, 2024, the weekly average for a 30-year fixed-rate mortgage is 6.79%. Mortgage rates have continued to rise since their recent bottom in September despite the Federal Reserve cutting rates.
Employment: According to the Bureau of Labor Statistics's Employment Situation Summary, employment was essentially unchanged in October, and the unemployment rate was also relatively unchanged at 4.1%. Employment continued to trend up in health care and government. Temporary help services lost jobs. Employment declined in manufacturing due to strike activity. September’s job openings reached their lowest level since 2021, indicating a longer-term downward trend in the labor market, particularly in health care and government sectors. This reflects a cautious outlook for future hiring. According to the Job Openings and Labor Turnover Summary (JOLTS), the number of job openings, hires, and total separations changed little month-over-month as of the end of September.
Consumer Sentiment: According to the University of Michigan's Surveys of Consumers, consumer sentiment improved for the fourth consecutive month, rising to its highest reading in six months. Year-ahead inflation expectations are down slightly from the previous month to 2.6% – the lowest since December 2020. Long-run inflation expectations increased slightly from 3% the previous month to 3.1%.
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About the Author
Holzberg Wealth Management is a family-owned and operated financial planning and investment management firm based in Marin County, CA. As your financial advisors, we serve you as a fiduciary and are fee-only, so we never receive commissions of any kind. We help individuals and families like you in the greater San Francisco Bay Area and virtually nationwide with the financial decision-making process to organize, grow, and protect your assets.
** This writing is for informational purposes only. The author and Holzberg Wealth Management do not guarantee or otherwise promise any results that may be obtained from using this report. No reader should make any investment decision without first consulting their financial advisor and conducting their own research and due diligence. These commentaries, analyses, opinions, and recommendations represent the personal and subjective views of the author and do not constitute a recommendation, offer, or solicitation to make any securities transaction. The information provided in this report is obtained from sources that the author believes to be reliable. External links to third parties are being provided for informational purposes only. Holzberg Wealth Management is not affiliated with the third-party websites linked to, unless otherwise explicitly stated, and does not constitute an endorsement or approval by Holzberg Wealth Management of any of the third party’s products, services, or opinions. Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Any charts and graphs provided are hypothetical and for illustrative purposes only, are not indicative of any investment, and assume reinvestment of income and no transaction costs or taxes.