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Stocks Gain
A big rally for U.S. stocks on Wednesday offset the impact of Monday’s decline, sending the major indexes to modest weekly gains. The NASDAQ added around 2%, the S&P 500 rose 1%, and the Dow finished up slightly.
Stocks rallied on Wednesday after U.S. Federal Reserve Chair Jerome Powell confirmed in a speech that smaller interest-rate increases could start as soon as the Fed’s December 13-14 meeting. Officials approved rate hikes of three-quarters of a percentage point at each of their last four meetings.
Wednesday’s speech by U.S Federal Reserve Chair Jerome Powell fueled a rally that saw the NASDAQ jump 4.4%, the S&P 500 rise 3.1%, and the Dow add 2.2%. The Dow’s gain put that index into a new bull market, as it rose more than 20.0% above a recent low on September 30.
The labor market remains a source of strength in the weakened U.S. economy, as 263,000 new jobs were added in November. It marked the fourth consecutive month with jobs gains in the 200,000 to 300,000 range and the 23rd month in a row with at least 200,000.
The yield of the 10-year U.S. Treasury bond tumbled to its lowest level in two and a half months, settling around 3.51% on Friday after ending the previous week at 3.69%. The fall in yields came amid continuing signs that high inflation has recently been moderating.
Companies in the S&P 500 posted an average earnings gain of 2.4% over the same quarter a year earlier, according to FactSet data from the recently concluded earnings season. That result marked the slowest growth rate since the third quarter of 2020. For the third quarter in a row, energy was the strongest among all 11 sectors, with earnings growth of 137.0% in the latest quarter.
An index that measures investors’ expectations of short-term U.S. stock market volatility fell for the sixth week out of the past seven. The CBOE Volatility Index (VIX) slipped to the lowest level since mid-August and was down more than 43% from a recent high in mid-October.
The S&P 500 recorded its second monthly gain in a row during November, posting a 5.4% total return. All 11 sectors were positive; materials was the strongest performer (11.8%) and consumer discretionary was the weakest (1.0%), according to S&P Dow Jones Indices.
Source: John Hancock Investment Management
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