Weekly Market Update November 29, 2023

All eyes have been on the November U.S. equity market rally which experienced its fourth consecutive week of gains last week. Key macroeconomic data reported in November has also been supportive of the broader risk-on environment, starting with corporate earnings. With the third quarter earnings season nearly complete for S&P 500 companies, the year-over-year earnings growth is projected to be a robust 4.3%, marking the first quarter of year-over-year earnings growth in a year. Gross domestic product (GDP), a broad measure of economic growth, was estimated at an impressive 4.9% in the third quarter, up from 2.1% the quarter earlier. (Source: The Wall Street Journal)

Conversely, the real estate market continues to sputter. While home prices have remained somewhat resilient due to supply constraints, year-over-year existing home sales fell 14.6% in October compared to a year earlier, the worst slowdown in 13 years. Elevated mortgage rates are the primary culprit for the real estate market slowdown, as the national average mortgage rate remains elevated between 7.5% and 8%. The most concerning segment of the real estate market is the commercial office space, which is facing headwinds of maturing debt needing to be refinanced and a wave of expiring leases which may reshape the office sector in the years to come. (Source: CNBC)

This week's focus will be on the first revision of third quarter GDP reported on Wednesday, followed by the Fed's preferred measure of inflation, personal consumption expenditures (PCE), on Thursday.

Blueprint Numbers

ALL ABOUT TIME HORIZON - The S&P 500's performance can be volatile; the best single year return since 1926 was +52.6%, while the worst was -43.8%. Zoomed out over a long enough time horizon and the downside risk reduces substantially. The single worst 10-year return since 1926 was -1.7%, the worst 15-year return is basically flat, and the worst 20-year return is +2.4%. (Source: A Wealth of Common Sense)

END OF YEAR TRENDS - Over the past 30 years, the stock market has finished strong post-Thanksgiving with an average return of 1% and generated a positive return approximately 75% of the time. Further, when the stock market generates a positive return to end the year it leads to an average 11% annual return the following year. (Source: Edward Jones)

TIME TO PAY THE BILLS - With elevated interest rates comes higher interest payments, and America's interest bills are going up. Interest as a percentage of GDP reached 3.55% in September, a level not seen since the late 1990's. The highest this ratio has reached is just under 5% in the mid-80's and early-90's. (Source: Jim Bianco)

ISRAEL/HAMAS PROGRESS - Under a four-day ceasefire, Hamas released the first hostages since the October 7th terrorist attack on Israel. In the first day of the hostage exchange, Hamas released 24 hostages, including 13 Israelis, 10 Thais and one Filipino. In return, Israel released 39 Palestinians from prison. The fourth day of hostage exchanges is expected to be carried out on Monday. (Source: Associated Press)

The opinions voiced are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Stock investing includes risks, including fluctuating prices and loss of principal.