Key Takeaways
- Stocks End November With Strong Gains, Led By Small Caps
- Key Events This Week Include Earnings, Powell’s Speech, And Jobs Data
- Investors Should Monitor Volatility, Bitcoin, And Bond Market Signals
Last week was a holiday shortened week, and stocks were in a celebratory mood. The S&P 500 gained 1% and closed November higher by 6%, its best month of the year. Tech stocks also had a strong end to the month with the Nasdaq Composite also gaining 1% for the week and 6% for the month. The Dow Jones Industrial Average added 1.4% last week, closing higher by 7% for the month. But the big winners last week and last month were small cap stocks. The Russell 2000 added 1.7% for the week and 11% for November.
Looking forward to this week, we have a limited number of events taking place, but they are events worth noting. On the earnings front, Marvell and Salesforce are both scheduled to report after the close on Tuesday. Then on the economic calendar, we’ll get the latest JOLTS report tomorrow and November employment numbers on Friday. Mixed in between those releases will be Fed Chairman Powell who is scheduled to speak Wednesday.
Some things I’m watching today include Stellantis. CEO, Carlos Tavares is stepping down effectively immediately. Tavares was planning to step down in 2026, but following a difficult year, he will leave early. Shares of Stellantis are down 8% in premarket trading. Also on the CEO front, it was announced this morning that Pat Gelsinger has retired as CEO of Intel. This is a stock that has struggled significantly over the last year and on the news, the stock is up 5% in premarket trading. I’m also keeping an eye on oil. Crude oil prices are up 1% as the current cease-fire in the Middle East is showing some signs of strain. Lastly, today is Cyber Monday and following a strong Black Friday, I’m paying attention to online retailers and what they have to say about the strength of consumer spending.
As we head into the last month of the year, I think it’s worth taking inventory of where stocks are. The S&P 500 is up 27%. The Nasdaq Composite has gained 28%. Meantime, the Dow is up 19% and the Russell 2000 is up 20%. At the same time, we’ve seen a substantial pullback in bonds and an increase in interest rates. The yield on the 10-year note, which fell as low as 3.6% as recently as September, has steadily climbed higher despite interest rate cuts of 50-basis points and another 25-basis points, to its current level of 4.21%. When the Federal Reserve cuts interest rates, it does so at what’s known as the front-end of the yield curve, meaning it can reduce rates on very short-term borrowing costs. However, the market is what ultimately decides longer-term rates. What that implies is, looking out in time, the market is seeing signs of potential headwinds. That could be in the form of inflation, an overall economic slowdown, or some combination of both.
With earnings season all but over and the market trading at a 12-month forward-looking price-to-earnings multiple of around 22, it’s easy to make the argument that stocks are fundamentally extended. If bonds are foretelling of upcoming turbulence, it could be setting the stage for a correction. Taken in the context of this year’s returns thus far, that doesn’t seem all that unreasonable. Therefore, it may not be a bad time to review your holdings and decide if it’s time to take some profits.
For today, I’m watching volatility. The VIX is up 3% in premarket and following last week’s strong showing in equity markets, I want to see if stocks can hold those gains. I’m also watching bitcoin. Bitcoin futures broke $100 thousand a little over a week ago; however, the cash product has yet to pierce that level. While I think a big deal will be made about that threshold, should it be breached, I’m more curious as to whether or not it will be able to hold that level. Often times when investors become fixated on a certain price level, it can mark an inflection point where price reverses, at least in the near-term. As always, I would stick with your investing plans and long-term objectives.
tastytrade, Inc. commentary for educational purposes only. This content is not, nor is intended to be, trading or investment advice or a recommendation that any investment product or strategy is suitable for any person.