Why did Nasdaq soar 9% in November? Check outlook for US stock market in December

The US Central Bank’s indication of slower rate hikes in the future and signals of easing of Covid restrictions in China allowed the market to trade higher in November. The upward trend in November was a continuation of the same from October. November saw Dow Jones gaining 7%, S&P 500 rising 8.4% and Nasdaq rising 9.1%. 

US Stock Market Movement in November 2022 

• For the US markets, November started on a somber note amid Fed’s rate hike and better-than-expected job scenario. 
• The second week of November was marked by the mid-term election results and the crypto crash. The week ended on a positive note as October inflation data indicated that the same has peaked and is expected to fall in the future. 
• Optimism from the previous week faded as markets ended lower in the third week. Amid  a rise in oil prices and a subsequent rise in expected inflation, Nasdaq turned out to be the worst performing index, witnessing a fall of 1.57%. 
• The holiday shortened last week of November ended on a positive note for investors. With falling oil prices and easing bond yields, all the major indices gained in the week. 

Notably, the momentum in the markets was aided by the Fed’s stance of lowering the pace of rate hikes in the future.

 US stock market this month: Which sectors gained and which lost?

All the sectoral indices ended in the green in November. The materials index rose the highest, clocking a growth of 11.8%, while consumer discretionary index recorded the slowest growth of 1%.

FAANG One Month Returns (as of Dec 1) 

US stock market this month: Major highlights

Slowing of Fed Rate Hikes: The US Central Bank went for a 0.75% rate hike. Interestingly, the Fed Chair Jerome Powell indicated that the pace of rate hikes would be slower than previous times. However, curbing investors’ enthusiasm, Powell remarked that considerable uncertainty remains around the terminal rates and the same could be expected to go higher in the future.

Job Growth Slows: With an expected job growth of 200,000, job growth seems to have slowed from October, according to Dow Jones. The unemployment rate is likely to be steady at 3.7%, while average wage growth dragged down to 0.3% month-over-month, from 0.4% in October, according to experts.

Strong Monthly Retail Sales: November’s retail sales were solid as the holiday season began with the Black Friday weekend. Black Friday online sales touched $9.12 billion which denoted a growth of 2.3% from the previous year. Moreover, the S&P Retail Index 7.3% in November, indicating a third consecutive month of increase in consumer spending.

Decline in Oil Prices: Oil prices declined by 7% in November. Notably, the average cost of a gallon of regular gas in the U.S. stood at $3.495, a decline of 7% from the last month.

Yields Decline: The surge in equities was supported by the decline in the benchmark U.S.10-year Treasury. The yield for the same declined to 3.60% from October’s peak of 4.25%. 

Where are the markets headed next month?

The markets got an early Christmas gift from the Central Bank amid signals of a softer rate hike in the coming future. However, any unforseen economic headwind can put a dent to this rally. Further, market participants will also keep a keen eye on the November jobs report , Producer Price Index data, Consumer Price Index data, FOMC Rate Decision, and retail sales data.

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.