MARKET RECAP *
- Major US stock markets outperformed driven by the unexpected presidential election of Donald Trump
- Bonds and international stocks exhibited negative returns
- The S&P 500 increased by 3.7% on the month and is now up almost 10% year-to-date
- Top Sectors: Financials (+13.7%), Industrials (+8.5%)
- Bottom Sectors: Utilities (-6.0%), Consumer Staples (-4.5%)
- The rise in Financials and the underperformance of Utilities are believed to be from expectations of higher interest rates, and less regulations under the Trump administration
- Value outperformed Growth especially in small caps in November and YTD
- This is believed to be due to Trump’s promises of higher fiscal stimulus, lower corporate taxes, and less regulations which tends to benefit value stocks more than growth stocks
- International developed countries are the only equity asset class with a negative return YTD
- The MSCI EAFE index is down -1.3%
- Emerging markets declined almost 4% in November but are still up over 11% YTD outpacing the S&P 500
- Long-term Treasuries drastically underperformed on the month (-7.65%) due to higher expectations of future rate hikes by the Federal Reserve, greater GDP growth, and increases inflation under a Trump administration
- The Ten-Year Treasury yield rose sharply to 2.37% from 1.84%
ECONOMIC NEWS
- The U.S economy added 178,000 jobs in November***
- Unemployment decreased to 4.6%, well below the Fed’s definition of the “full employment” rate
- The market’s consensus is 100% that the Federal Reserve will initiate a 0.25% rate hike at the December 14th meeting putting the Fed Funds rate at 0.5-0.75%**
