Monthly Market Monitor - November 2014 Recap
U.S. stocks extended gains in November as investor optimism was bolstered by improving economic data, corporate earnings reports and fresh central bank interventions in China, Japan and Europe. The S&P 500 finished the month within five points of its most recent all-time high and has rallied over 11% from a six-month low on October 15th. Key performance catalysts during the month include the Republican sweep in the 2014 mid-term federal and state elections and a surprise upward revision in 3Q GDP growth from 3.5% to 3.9%. Additionally positive, tumbling oil prices provided consumers with price benefits at the gas pump and helped trigger broad-based gains for retailers and airlines. WTI crude oil prices sank 10% on the last day of the month to $66.15 per barrel, a four-year low, after OPEC member nations voted to keep production levels unchanged. Meanwhile, the Federal Reserve conducted their last monthly bond purchases in November, concluding their third round of stimulus known as quantitative easing (QE3). Current consensus forecast expects that the central bank may begin to raise interest rates by the middle of next year.
Coming off a 6.6% October gain, small-cap stocks rose just 0.1% last month, as measured by the Russell 2000 Index. The Russell 2000 is up 2% YTD. Mid-cap stocks, as measured by the Russell Mid Cap Index, rose 2.6% in November, extending YTD gains to nearly 13%. Growth-oriented stocks outperformed value in both November and YTD time frames. The Russell 1000 Growth Index rose 3.2% in November and 14.2% YTD, whereas the Russell 1000 Value Index gained 2.1% and 12.8%, respectively.
Nine of the ten major equity sectors rallied last month, led by Consumer Staples (+5.5%), Consumer Discretionary (+5.4%) and Technology (+5.3%). Energy (-8.5%) shares slumped. For the year, Healthcare (+27%), Utilities (+24.6%) and Technology (+22.2%) are up the most, leaving just Energy (-8.2%) as the only sector to not participate in this yearâ€™s rally. NYMEX gold futures fell $6 to $1,167 per ounce in November, and are down 3.2% for the year.
Overseas developed markets continue to underperform relative to the U.S., as the MSCI EAFE Index rose 1.4% last month and is down 1.5% YTD. The MSCI Emerging Market Index fell 1.1%, trimming its YTD gain to 2.5%. Spurred higher by central bank interest rate cuts, Chinaâ€™s Shanghai Composite rallied 10.9% last month, its highest monthly return since December 2012.
Treasuries, as measured by the Barclays U.S. Government Bond Index, rose 0.8% during November, lifting YTD gains to 4.8%. The yield on the 10-year U.S. Treasuries ended the month at 2.165%, falling 17 basis points during November and is down 88 basis points YTD. U.S. investment grade bonds, as measured by the Barclays U.S. Aggregate Bond Index, returned 0.7% in November, extending YTD gains to 5.9%. The Barclays U.S. Corporate High Yield Index, a proxy for non-investment grade corporate bonds, fell 0.7%, trimming YTD returns to 4%. The Barclays Municipal Bond Index inched higher by 0.2% last month, its eleventh consecutive monthly gain, which lifted its YTD gains to 8.5%.
This information is compiled by Cetera Investment Management.
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