Two the Point — Seasonal Market Insights: Unwrapping the Santa Claus Rally

Key Points:

• The S&P 500 is up about 19% as of the end of November, after surging 9% for the month.
• Significant rally in the U.S. Aggregate Bond Index, marking the largest monthly gain since 1985.
• Factors shaping market sentiment: Fed’s stance, soft landing, and disinflation traction.
• December’s historical market patterns and the Santa Claus rally.
• Positive historical returns during presidential election years (83% of the time).

As we approach the conclusion of 2023 and venture into 2024, the dynamic nature of market performance comes sharply into focus. Against the backdrop of a year marked by unforeseen twists and turns, the recent ascent of the S&P 500, reflecting about a 19% increase, underscores the resilience inherent in well-crafted, custom portfolios aligned with individual investment goals. Notably, November’s impressive 9% rally has not only revitalized equities but also witnessed a historic surge in the U.S. aggregate bond index, the most substantial monthly gain since 1985.

As we navigate the currents of market dynamics, it becomes imperative to discern the underlying factors shaping investor sentiment. A buoyant outlook around the Federal Reserve’s stance, coupled with perceptions of a soft landing and disinflation traction, has fueled optimism. Furthermore, the meticulous scrutiny of Core PCE inflation metrics reveals a deceleration, converging closely with the Federal Reserve’s annual target. Looking ahead to December and contemplating the historical patterns of market behavior, we find that, despite a robust November, the prospect of a customary December Santa Claus rally remains intact. In the broader context, as 2024 beckons with the nuances of a presidential election year, historical data suggests positive returns the most of the time. However, these observations, while valuable, necessitate a nuanced approach, emphasizing the importance of a strategic investment plan in navigating the inherent volatility. As always, we stand ready to provide the expertise and guidance needed to navigate these intricate financial landscapes.