December 2023 Market Update

August, September, & October really tested investor’s patience with back-to-back declines into correction territory.  November, however, put a definitive stop to that…and just in time for the holidays too!

All 3 stock indexes posted strong returns with the S&P 500 logging one of its best months on record.  (Every sector was up except for energy.)  Even the Bond Index rose 5% during the month.  (I’d like to think it was the holiday spirit kicking in ahead of Thanksgiving).  An important theme last month was the broadening out of the markets.  The Equal-Weight Index had a strong rally and is now up over +5% YTD while Small Caps finally saw some gains as well.  Sure, tech (+12.7%) was still the primary outperformer but Real Estate and Financials, which had been lagging tremendously all year, were right behind tech to enjoy big months of their own (up 12.2% & 10.7% respectively).  It was much needed.

Here are the YTD numbers:


Brokered CD Rates

As of 11/29/2023. *APY represents the interest earned based on simple interest calculations. Rates are subject to change and availability. Minimum purchase may apply.


So, what sparked the rally?


Seasonality may be the simplest reason.  Markets were hot most of the year but mostly led by big tech and excitement around AI.  August and September have traditionally been poor-performing months, and this year proved to be no exception.  We’d previously mentioned we thought we were overdue for a correction and that’s exactly what we got.  By late October, however, the correction was looking oversold, and the markets rallied back dramatically.  It ended up looking like a textbook seasonal correction.

Inflation continues to trend lower by every measure and currently sits at 3.2%.  The Fed’s preferred gauge of inflation is the Core PCE reading, which came in at the lowest since March 2021.  In fact, many products and goods have entered deflation territory as was confirmed by Walmart’s earnings call with management last month.  As anyone who does the grocery shopping can confirm, grocery prices still feel high, but they are showing signs they’re beginning to cool to some degree.  The average Thanksgiving dinner cost 5% less than it did this time last year.

The Fed didn’t raise rates in November as some had suspected they might.  This means the last rate hike we saw was way back in July.  The employment and the jobs market have been incredibly strong the past 2 years but are starting to show signs of easing.  Some headlines have said this rate-hiking cycle is now over.  We don’t know if we’re ready to say that just yet, but we do feel it’s fair to say the bar to raise rates any further is pretty high at this point.  (We won’t even waste our time trying to predict when potential rate cuts will happen.  Even Fed Chairman Powell doesn’t know that).

Bond Yields retreated significantly in November with the 10-year Treasury ending under 4.4%, a sharp pullback from the brief 5% they hit only a month ago.  But it was enough to get the bond market back into positive territory for the year.  Prior to November, the bond market was on track for its 3rd straight year of back-to-back declines.  We’re not sure that’s ever happened before.

3rd Qtr GDP was revised even higher to 5.2%.  That’s a big number and why there’s so much focus on the “soft-landing”.  Once again, firms and economists are delaying their calls for a mild recession from early 2024 to mid-2024 or later.

As we bring 2023 to a close in the coming weeks, there are a few things we thought we’d highlight.  The S&P is up over 11% since the low of Oct. 27.  That’s a very fast rebound and feels like it’s in overbought territory.  That doesn’t mean it needs to come back down, but a slight pause to catch its breath wouldn’t be out of the question.  That said, December is historically the 3rd best month of the year for the markets so there is some reason to be optimistic that we may still have some upside left in 2023 just yet.  It also wouldn’t surprise us if there continues to be some rotation in performance from the narrow range of companies that led this year to some of those areas that have felt overlooked and left behind.   Call it a “reversion to the mean” if you will, but lopsidedness in the markets usually rectifies itself at some point.


Here's your Useless Fact of the Month:

Looking for a destination for your next holiday getaway with a loved one?  Is Cleveland, OH at the top of your list?  Maybe it should be.  For only $395/night you can stay in the actual home that “A Christmas Story” was filmed in.  The house featured in the movie was an actual home in Cleveland but, once filming concluded, wasn’t much more than an afterthought until some 21 years later when a man from San Diego bought the house on eBay for $150,000. He spent $240,000 of his own money in renovations to make the house an exact replica of the movie inside and out.  It even includes actual props from the movie like Ovaltine in the kitchen, Ralphie’s Red Rider BB gun, & of course a pink bunny suit.

My favorite part of this story is finding out where the guy from San Diego got the money to do all this:  He owns his own business called The Red Rider Leg Lamp Company where he sells replicas of the infamous lamp from the movie.  It’s actually on sale right now for $199 if you need any last-minute gift ideas!

On behalf of John, Lindsay, myself, and everyone here at Signature Wealth Strategies:

We wish you all a Merry Christmas and a Happy New Year!


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