weekly market update 12/1/2023

November was a great month for both stocks and bonds with the S&P 500 rising 8.9%, its best month in over a year, while the Bloomberg US Aggregate bond index rose 4.8%, its strongest monthly gain in nearly four decades.  Underpinning the broad market rally was a sharp decline in interest rates, continued deceleration in inflation, seasonality, and better than feared earnings.  While the last two years have been a rollercoaster for the S&P 500, the index coincidently ended this November at 4,567.8, almost identical to November 30, 2021, when it closed at 4,567.0!  Next week will be headlined by the employment report for November on Friday.

SHOP ‘TIL YOU DROP?

After a retail sales lull in September and October, the US consumer has shown renewed signs of resilience as shopper turnout across websites and stores hit an all-time high of 200.4 million over the five-day weekend from Thanksgiving Day through Cyber Monday (per the National Retail Federation).  E-commerce was a particular standout, rising 7.5% on Black Friday and 9.6% on Cyber Monday from a year prior (per Adobe) to over $22B combined.

Obviously strong retail sales are good for the economy, but cracks are starting to form in the US consumer.  Buy-now-pay-later (BNPL) services are increasingly popular and from November 1 through November 26, consumers spent $7.3B using BNPL, up 14% from a year ago while Cyber Monday BNPL usage hit all-time highs surging 42.5% year-over-year (per Adobe).  Heading into the weekend, we are by no means trying to channel our inner Ebenezer Scrooge, but it is increasingly apparent that the US consumer is relying on debt and we are watching this very closely.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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