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Weekly Recap | December 4, 2023

Weekly Recap | December 4, 2023

December 05, 2023
Weekly Recap

November 27 - December 1, 2023 Recap

Fifth Straight Weekly Gain

November Rally Continues
All three major U.S. equity indices extended their gains into a fifth straight week, with small cap companies and REITs leading the way. The week was largely guided by dovish leaning commentary from several Fed policymakers. Notably, Fed Governor Waller said he is increasingly confident monetary policy is currently well-positioned to get inflation back to 2% and that there is no reason for rates to remain high should inflation continue to go down.

For the Week…
The S&P 500 gained 0.83%, the Dow Jones Industrial Average surged 2.60%, and the tech-heavy Nasdaq Composite rose 0.41%. Small caps outperformed, with the Russell 2000 gaining 3.12%.

GDP Revised Higher
The third quarter GDP was upwardly revised to an annualized 5.2% pace from an initial estimate of 4.9% (5.0% expected), following 2.1% growth in the second quarter. The revision was primarily due to upward revisions to non-residential fixed investment and state and local government spending, partly offset by a downward revision to consumer spending growth.

Weekly Sector Insights
All but two of 11 S&P 500 sector groups posted gains last week with Real Estate (+4.67%), Materials (+2.78%) and Industrials (+2.20) up the most. Technology (+0.35%) gained the least while Communication Services (-2.38%) and Energy (-0.06%) lagged. Year-to-date, Technology (+52.28%), Communication Services (+48.32%) and Consumer Discretionary (+35.94%) are the top performers.

Treasury Yields Drop
Treasury yields declined last week as Wall Street conviction intensified that the Federal Reserve will likely refrain from raising interest rates at their December policy meeting. The 10-year Treasury yield ended Friday at 4.220%, down a whopping 0.70% for the week.

The Latest from @CeteraIM

S&P 500 at New 2023 High

November Mfg PMI Still Bearish

Progress on Fed’s Preferred Inflation Index

Economic Calendar

Monday, December 4
Factory Orders.

Tuesday, December 5
S&P/ISM Services PMIs, JOLTS Job Openings.

Wednesday, December 6
Mortgage Activity, ADP Private Payrolls, Labor Productivity, Unit Labor Costs, U.S. Trade Deficit.

Thursday, December 7
Challenger Layoffs, Jobless Claims, Wholesale Inventories, Consumer Credit.

Friday, December 8
Nonfarm Payrolls, Unemployment Rate, Hourly Wages, Consumer Sentiment.

Household credit card debt is up 16% over the last year, surpassing $1 trillion for the first time. It doesn’t look so grim when compared to disposable income (net of tax income). Credit card debt is 5.3% of disposable income, which is below the Q4 2019 pre-pandemic level of 5.7%.

This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.

About Cetera® Investment Management
Cetera Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.

About Cetera Financial Group
“Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), and Cetera Financial Specialists LLC. All firms are members FINRA / SIPC. Located at 655 W. Broadway, 11th Floor, San Diego, CA  92101.

Disclosures
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No independent analysis has been performed and the material should not be construed as investment advice. Investment decisions should not be based on this material since the information contained here is a singular update, and prudent investment decisions require the analysis of a much broader collection of facts and context. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The opinions expressed are as of the date published and may change without notice. Any forward-looking statements are based on assumptions, may not materialize, and are subject to revision.

All economic and performance information is historical and not indicative of future results. Investors cannot directly invest in unmanaged indices. Additional risks are associated with international investing, such as currency fluctuations, political and economic instability, and differences in accounting standards.

Glossary

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. 

The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe. 

The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index. 

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership. 

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market. 

The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership. 

The Bloomberg US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years. 

The Bloomberg US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years. 

The Bloomberg US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity. 

The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted. 

The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index. 

The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.

 The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.

 The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.

The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.