Santa Claus Shops Earlier than Amazon Prime Users

Santa Claus shopped for stocks at the end of October, post institutional tax positioning.  The S&P 500index rose + 5.9% last week, the DJIA +5.1, and NASDAQ Composite +6.6%, marking the markets largest weekly increase of the year.  Investors remember that large percentage moves happen most often when the markets are down and get oversold as they were at the end of October.  Comments by Federal Reserve Chair Jerome Powell combined with a weaker-than-expected October jobs report helped ease investor worries about future rate policy.

The S&P 500 ended the week at 4,358, up from the prior Friday’s close of 4,117. The gain put the index back in double-digit territory for its year-to-date percentage gain.  The S&P 500 is now up near +14% year to date, a significant improvement from its year-to-date gain of 7.2% one week ago. On Tuesday, October 31st, the S&P 500 closed out October with a monthly drop of -3.1%, marking its third consecutive monthly decline. Worries about the Federal Reserve interest rate policy helped push the markets lower in October.

However, the stock market started November off with a strong, and quite normal, relief rally as the Federal Open Market Committee held the target range for its federal funds rate steady at their meeting. Follow-on comments by Powell focused on progress on moving inflation lower. Investors saw this as a hint that the committee’s rate increases may be ending.

The stock market rally accelerated up late in the week after data released Friday showed the US economy added fewer-than-expected jobs in October.  In addition, the unemployment rate unexpectedly rose.  Weaker-than-expected job growth is seen as reducing the likelihood of more rate increases.

All S&P 500’s sectors rose week-to-week.  The markets were led by year-to-date laggards.  A +8.5% jump in real estate, a +7.4% rise in financials and a +7.2% increase in consumer discretionary led the pack higher. The smallest increase was logged by energy, which still rose +2.3%.

The rise in real estate stocks included shares of Simon Property Group (SPG), which had a +13% increase as the shopping mall operator posted Q3 funds from operations and revenue above analysts’ expectations and raised its guidance for full-year funds from operations.

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Week ending 11/3/2023 Table, cumulative total returns