December 2023 Market Watch

December 6, 2023

Market Health Indicator - Current Score

The Market Health Indicator (MHI) measures market health on a scale of 0 - 100, analyzing various market segments such as economics, technicals, and volatility. Higher scores indicate healthier market conditions.

Markets had plenty to be thankful for in November.

Coming off three consecutive monthly declines, stocks soared higher in November on the back of growing rate pause expectations. A batch of favorable economic reports helped support this sentiment throughout the month. Labor market data remained positive signaling continued expansion, but slowed enough to show it might be cooling down, and inflation came in below expectations.

With economic data hitting the sweet spot, markets reversed course sharply higher after spending the previous few months in turmoil. All three major US indices finished the month higher with gains of 10.70%, 9.13%, and 8.77% for the Nasdaq, S&P 500 and Dow Jones Industrial Average respectively. Smaller companies also joined in the rally, with the Russell 2000 gaining 8.83%. Overall, it was the largest monthly gain for US stocks since July 2022.

Overseas, markets followed suit with developed international stocks jumping 8.81% and emerging markets rising 7.09%. Ongoing geopolitical issues caused a slight lag abroad, but the general risk-on sentiment was enough to lift global equities higher.

As expected, the Fed left rates unchanged in its November meeting. However, expectations of a more permanent pause going forward caused the 10-year Treasury yield to fall from 4.88% to 4.37%, resulting in a gain of 4.45% for aggregate US bonds. This snaps a six-month losing streak for bonds as rising rates had remained a headwind. While it remains to be seen if the Fed is officially finished with its rate hiking campaign, higher rates could be beneficial for bonds moving forward. Despite the mid-year slump, aggregate US bonds are now up 1.56% YTD as higher income payments have helped offset some of the downward price pressure.

While November provided some much needed relief, the past few months show why it's important to stay focused on the long-run when it come to investing. Markets have shifted from a rally, to correction territory, back to fresh YTD highs in relatively short order. Having a plan in place can help block out these short-term market ebbs and flows, directing focus to achieving your long-term goals.

Back from Beyond...

In April, Bed Bath & Beyond filed for bankruptcy as it failed to compete with the likes of Amazon trying to offer cheaper private-label brands.

However, its baby-products retailer Buy Buy Baby had been a bright spot for the struggling company, and was sold during the summer.

Now Buy Buy Baby’s new owners have reopened 11 stores, with plans of opening 100 more locations over the next three years.

Despite the original parent company’s struggles, Buy Buy Baby’s CEO says physical stores allow shoppers to test out bigger products like strollers.

With a sizable portion of sales coming from expected parents, the company said people also tend to add more to their registries in-person compared to shopping online.

It’s banking that in sight means more in the cart.

What goes around, goes around, goes around....

As Justin Timberlake once said, “what goes around, goes around, goes around, comes all the way back around.” 

It was a wild month for OpenAI CEO Sam Altman, who is seen as a leader in artificial intelligence development. 

In a surprise move, the OpenAI board of directors pushed Altman out of the company for “a breakdown in communications.” 

Shortly following the news, Microsoft, which has invested $13 billion into OpenAI, announced it was hiring Altman to lead a new research lab. 

Then, less than a week after he was fired, OpenAI reinstated Altman as CEO with a new board in place as investors and employees were irate about what transpired. 

Following the bizarre sequence of events, OpenAI looks to build on its success after releasing ChatGPT just over a year ago.

Fun Facts

• Macy’s is the world’s second largest consumer of helium, behind the US government, thanks to its Thanksgiving Day Parade balloons.

• While Venus is closer in order, on average Mercury is the closest planet to Earth due to its quicker and narrower orbit around the Sun.

• The number four is the only number with the same amount of letters as its name.

• This year, the average first-time homebuyer is 35 years old, down from a record high 36 years old in 2022.