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THE MARKET MONTH THAT WAS By Carol Buss

November 2019 lived up to its billing as one of the best months of the year, with the Dow up 3.72%, the S&P 500 up 3.4%, and the Nasdaq up 4.5% for the month. The momentum from October continued on the 1st day of November, with both the S&P 500 and the Nasdaq setting record highs on that day, in reaction to a better-than expected employment report. On the 15th, the Dow cleared 28,000 points for the first time ever. This out-performance is not unusual, as the days before the Thanksgiving holiday are usually positive and November to January is usually a good period for the stock market.

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As has been the case for the past few months, November 2019’s positive bent was primarily due to a net optimistic attitude about the progress of the U.S./China trade talks, but also due to good economic news, and 3rd quarter earnings reports that were stronger than expected. As of November 15th, 94% of S&P 500 stocks reported 3rd quarter results. Earnings beat by 4.4%, with 69% of the companies surpassing their earnings estimates, just slightly lower than over the past 3 years, when earnings beat by 5.4% and 71% of companies exceeded their profit expectations.

Also providing support for the market is the search for better returns, given the low interest-rate environment. After cutting rates for the third time this year on October 30th, the Fed indicated that rates would remain at current low levels. The dividend yield of the S&P 500 (12 months of dividends/share divided by price) as of the end of November was 1.87%, lower than recent months, but still above the risk-free rate (usually the 3-mo. Treasury Bill rate; as of 11-29-19, it was 1.59%).

Personal consumption constitutes about 2/3rds of economic activity, and the consumer remains the bright light in this economy. Consumer confidence edged up slightly in November to 95.7. Leading sectors in November were Health Care +8.45%, Technology +6.63%, Financials +5.45%, Industrials +4.86%, and Communication Services (+4.81%), Consumer Discretionary was up +1.81%, and Consumer Staples was up 1.52%. Many of U.S. companies’ positive results were consumer-oriented: CVS, Disney, Walgreens, Gap, Nordstrom, Footlocker, Best Buy, Dicks Sporting Goods, and Burlington are some examples.

As usual, most of the choppiness that occurred in November was primarily China Trade Talks-related. Any tweet or news report from both sides was enough to change the direction of the market instantaneously. The unrest in Hong Kong seemed to matter only because the U.S. support for the protester’s cause might derail the completion of a Phase One trade deal with China. At the beginning of the month, positive news boosted the market averages, but starting on November 20th, threatening statements by President Trump to continue to raise tariffs, saying that China needs the deal more than the U.S. does, hurt the market. Toward the end of the month, encouraging remarks by Vice Premier Liu, China’s top Trade negotiator, saying that there had been consensus about certain sticking points sent the market higher again

Overall, November 2019 was a strong month, building on the gains of October, and putting a smile on the faces of many investors in U.S. stocks.e text-only areas of your page to keep your website interesting to visitors.