It Didn't Take Long
It didn't take long for markets to undo the 2023 incremental declines of August to October.
Markets managed to squeeze in the first correction of the year during those three months (corrections nearly always occur once or twice a year), but the entirety of declines was reversed in November.(1)
Economic news during November tamped down fear of further Federal Reserve interest rate increases. New signs of slowing inflation reduced the risk of aggressive Fed action in coming months. Markets rationally found this appealing, responding favorably during the month with the largest monthly S&P 500 increase since October 2022.(5)
Nothing is more reliably a damper on markets (and nearly all asset classes) than a large increase in interest rates or recession risk.
Yes, interest rate risk declined in November, but recession risk has also faded from daily discussion as recent GDP numbers confirmed growth of 5.2% in the third quarter, even higher than the 4.9% initial announcement. As we noted last month, this reflects a vibrant consumer and also explains busy roads.(1)
November action is yet another confirmation that market timing is not a profitable pursuit.