Monthly Market Monitor: November 2013 Recap

The S&P 500 finished November within two points of its all-time high of 1,807, returning 3.1%, its third straight monthly gain. Ending a holiday week shortened by Thanksgiving, the broad-based equity index capped its eighth straight weekly gain, its longest string of gains since 2004. Equities were again supported by favorable stimulus policy from the Federal Reserve that kept intact the central bank’s monthly $85B bond buying program. The Fed’s actions have served as a foundation behind the S&P 500’s 168% rally from its bear market low in March 2009. Fed Chairman nominee Janet Yellen, whom poised to replace Ben Bernanke to lead the central bank in January, testified this month during her Senate confirmation hearing that she will ensure that monetary policy is not removed too soon to support the U.S. economic recovery.

Smaller-capitalized stocks outperformed large-caps as the Russell 2000, a proxy for small-cap equities, rose 4% last month. On a year-to-date (YTD) basis, the small-cap measure continues to widely outperform large-caps, gaining 36.1%. Growth stocks narrowly edged out value as the Russell 1000 Growth Index gained 2.82% in November while the Russell 1000 Value Index returned 2.79%. On a YTD basis, growth and value are also nearly even as the Russell 1000 Growth Index rose 29.8% versus 29.3% for the Russell 1000 Value Index. Commodities, as measured by the S&P GSCI Index, continued to lag stocks and bonds in November, falling 0.8%. Gold futures fell 5.3% last month, and the metal is down 25.2% YTD, poised to complete its first annual decline since 2000. West Texas Intermediate (WTI) crude oil futures fell 4.1% in November, a third straight monthly decline, the longest losing streak in nearly five years.

Eight of the ten major sector groups advanced in November, with Healthcare (+4.7%), Financials (+4.6%) and Technology (+4%) gaining the most. Telecom (-2.6%) and Utilities (-1.9%) lagged. For the year, Healthcare (+40.3%), Consumer Discretionary (+39.8%) and Industrials (+34.9%) are the biggest winners. Utilities and Telecom, both defensive sectors, have gained the least so far this year, rising 12.2% and 11.8%, respectively.

Overseas developed markets underperformed the U.S. last month as the MSCI EAFE Index returned just 0.8%. Emerging markets, as measured by the MSCI Emerging Markets Index, snapped a two month gain by falling 1.5% in November. After Chinese leaders announced sweeping reform measures on November 15th, China’s Shanghai Composite Index returned 3.7% last month.

Treasuries, as measured by the Barclays U.S. Government Bond Index, declined 0.3% on the month, extending its YTD loss to 1.7%. The yield on 10-year U.S. Treasury notes jumped 18 basis points in November to end the month at 2.75%. U.S. investment grade bonds, as measured by the Barclays U.S. Aggregate Bond Index, fell 0.4% last month, lifting its YTD loss to 1.5%. Municipal bonds, as measured by the Barclays Municipals Index, retreated 0.2% in November, increasing its YTD loss to 2.3%. The Barclays U.S. Corporate High Yield Index, a proxy for non-investment grade corporate bonds, returned 0.5%, pushing its YTD gain to 6.9%.

This information compiled by Cetera Financial Group is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The information has been selected to objectively convey the key drivers and catalysts standing behind current market direction and sentiment.

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