The market’s strong rally to close October continued into November, albeit at a much more moderate pace, as the S&P 500 gained about 2.5% for the month.
Compared to recent months, November lacked a lot of attention-grabbing headlines and saw a lot less overall volatility. One area that did experience quite a bit of choppiness was the oil market. Oil was hovering in the mid-$70 price range for most of the month, but on November 27, OPEC decided not to provide any support for oil prices, and oil fell over 10% that day. In what has been a fairly common theme lately, a majority of market sectors were positive that day (and for the month in general), but energy was hit hard by oil’s sharp decline, causing many investments with heavy energy exposure to lag.
The market responded well to central bank activity throughout the month. Mario Draghi of the European Central Bank made fairly dovish comments, and shortly thereafter, China cut rates for the first time since 2012. The Chinese news was particularly helpful, because the market viewed it as a sign that there would be greater demand from Chinese consumers, which could be a key factor in preventing deflation.
In addition to to global central bank action, the consensus in November was that rate hikes in the U.S. were still farther off than some had feared, due to “good but not great” job numbers reported in the month.
As we begin to look forward to 2015, we would like to share LPL Research’s 2015 Market Outlook, which we will discuss more fully in a future post.
We hope you enjoyed a nice Thanksgiving and wish you a happy and healthy holiday season.
Carl Beck
December 4, 2014