Stocks Gain
U.S. stock indexes climbed for the fourth week in a row as the S&P 500, the NASDAQ, and the Dow posted gains of around 1% in a holiday-shortened trading week. Over those four positive weeks, the S&P 500 was up nearly 11%.
With a little over a month left in 2023, U.S. growth stocks maintained a big performance gap over their value style counterparts—a sharp reversal from 2022, when value outpaced growth. Through Friday, a U.S. large-cap growth index was up 36.7% year to date on a total return basis; the return for its value-style counterpart was 4.8%
With nearly all third-quarter results in as of Friday, companies in the S&P 500 are expected to post an average earnings gain of 4.3% over the same quarter a year earlier, according to the latest data from FactSet. That result would mark the first quarter of earnings growth since the third quarter of 2022.
An index that tracks investors’ expectations of short-term U.S. stock market volatility fell for the fifth week in a row. The CBOE Volatility Index on Friday was trading around 42% below a recent peak on October 20. The so-called VIX is down roughly the same amount year-to-date.
U.S. sales of existing homes in October fell 14.6% from the same month a year ago to the lowest total in 13 years. With interest rates staying high, economists expect that 2023’s existing home sales total could end up being the lowest since 2011.
Tuesday’s release of minutes from the most recent U.S. Federal Reserve policy meeting showed that Fed officials gave no indications that they were inclined to begin cutting interest rates anytime soon. Members agreed that Fed policies need to stay “restrictive” until data shows a convincing trend that inflation will return to the central bank’s 2% target.
The short-term outlook for U.S. retail sales was mixed as of Black Friday, the unofficial start of the U.S. holiday shopping season. A forecast from the National Retail Federation projects that holiday spending during November and December is likely to rise 3.0% to 4.0% from last year. Such an outcome would lag last year’s holiday sales growth of 5.4%.
With the next monthly jobs report not scheduled to come out until December 8, Wednesday’s update on U.S. GDP growth is likely to be the most closely watched economic report of the new week. It will be the second estimate of third-quarter growth; the initial estimate released in late October put growth at a stronger-than-expected annual rate of 4.9%, up from a 2.1% figure in this year’s second quarter.
Source: John Hancock Investment Management
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