The Market’s Wild Ride

By Salvatore Bruno via

On the backend of the steep October drawdown, November started off with the uncertainty of the midterm elections. While there were expectations of a “Blue Wave”, the Democrats took the House and Republicans held the Senate. While the split legislature may cause some frictions regarding domestic policy, both parties seem to be on the same page regarding improving global trade policies.

The Fed, as expected, kept rates unchanged in November raising the likelihood of a 4th rate hike in December. Following two consecutive down weeks in the middle of the month, November managed to build some positive momentum in the final week to post 2.04% to end November and raise the year-to-date for the S&P 500 Index to 5.11%. Markets were helped upward following Chair Powell’s late November speech which came across as more dovish compared to his October statements.

His statements highlighting the Fed’s strong outlook for the economy also gave the market some confidence that the Fed may take a less aggressive stance on raising rates than previously thought. Trade concerns were in focus leading up to the G-20 Summit in Argentina with both the USMCA signing and the Trump-Xi meeting scheduled to occur that weekend.

3rd quarter preliminary labor productivity came in at 2.2%, above the survey estimate and 3rdQuarter GDP was confirmed at 3.5%. Changes in payrolls also came in above their October survey estimates at 250k (vs 200k) and 246k (vs 195k) for Nonfarm and Private payrolls. However, the November announcement by GM to reduce its workforce by 15% has sent some shocks to the affected regions of Ohio, Michigan, and Maryland. The final November initial jobless claim report rose to 234k from 224k.

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