Jordan Daugherty, Investment Analyst, presents our November video market update and shares what FSA is doing to respond.
NOVEMBER STOCK MARKET UPDATE TRANSCRIPT
Hello, I’m Jordan Daugherty, the investment analyst here at FSA and this is your November market update. The S&P 500 hit fresh lows for the year, sinking to the $3,500 level in mid-October. This marked a two-month decline that began in mid-August. This new low represents a fall of 25% on the entire year, but the story doesn’t end there. The second half of October rebounded another 9%, and the month would end positive for the S&P, posting a monthly return of 8%. This has been another great example of the volatility we’ve been up against all year long. These large multi-week rallies amid a market tracking lower and lower have left many investors feeling more and more paranoid as they try to navigate the broader downtrends facing the stock and bond markets. Looking broadly across asset classes, small cap and value stocks held the top spots, bringing in over 10% for the month.
Commodities found some footing as oil prices recovered as well. Looking at year-to-date numbers, value stocks have curbed their losses at around 9% for the year, while emerging market stocks are deep in last place behind bonds and growth stocks at a loss of 29%. You can also see that year to date commodities remain the only asset class in positive territory at over 27% gain. For the first time in years, the market balanced without big tech’s help. Except for Apple, mega cap technology stocks have faced mounting pressure. Only five big tech stocks account for nearly a quarter of the S&P 500’s weighting. However, it was energy sector that led the push. Oil and gas companies posted gains right through the market bottom up 26% in October and up still 69% year to date.
The Bureau of Economic Analysis released a positive 2.6% GDP growth rate for its advanced estimate. After two quarters of contraction, the divergence indicates a welcome nudge in the right direction. Questions do remain, however, whether pressure from high interest rates will cause a recession, but for now, a strong labor market and robust consumer spending remain tailwinds for the U.S. economy.
The recent rally in the stock market has provided enough evidence for us to trim some of our inverse positions. We continue to take advantage of increasing money market funds and have allocated heavily into them with our cash reserves. We continue to seek opportunities in hard-to-find corners of the market. Energy and biotech funds have been sources of outperformance, and we’ve also added a merger and arbitrage fund that produces absolute returns with low volatility in the more conservative strategies.
Please remember to inform your advisor of any changes in your life that might affect your investment objectives and how we manage your money. I appreciate you watching this month’s market update and thank you.
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