December 2023 Newsletter

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December Market Insights

Dive into market insights examining the post-holiday performance of the stock market. Over the past three decades, December has been a particularly robust month, with an average return of approximately 1%. Interestingly, more often than not, the market has seen a post-holiday uptick, boasting gains about 75% of the time.

Post-Thanksgiving triumphs

Delving into the history books, standout years include 2010, where the market experienced a remarkable 6.5% rally in December. Other noteworthy years include 2003, 1999, and 1998, each witnessing gains of more than 5% post-Thanksgiving. What’s intriguing is that when the market concludes the year on a positive note, it tends to set the stage for a promising start to the following year. In fact, a post-Thanksgiving market rise has correlated with a positive return the next year 77% of the time, with an average return of 11%.

Thanksgiving optimism in 2023

This year, the market heads into Thanksgiving on an upswing, adding to an already impressive year-to-date gain. Looking back to 1950, there have been 19 instances where the market entered the holiday season with a year-to-date gain of 20% or more. The subsequent year saw an average return of 17%, underscoring the potential for continued positive momentum.

S&P 500 December performance

For a visual snapshot, the chart below outlines the December performance of the S&P 500 index over the past 30 years. December has consistently been a favorable month for the stock market, registering positive gains approximately 75% of the time.

Growth vs. value

Zooming in on the current market dynamics, the tug-of-war between growth and value stocks continues. In 2023, U.S. growth stocks maintain a substantial performance lead over their value-style counterparts. In stark contrast to 2022, where value outpaced growth, this year sees a large-cap growth index boasting a 36.7% year-to-date total return, while its value-style counterpart trails at 4.8%.

Home sales: A dip in the real estate waters

Shifting gears to the housing market, October witnessed a 14.6% decline in U.S. sales of existing homes compared to the same month in the previous year. With interest rates remaining elevated, economists anticipate that 2023’s existing home sales could hit their lowest point since 2011.

Buying a home is now 52% more expensive than renting, the highest premium on record (note: the premium peaked at 33% during the last housing bubble in 2006).

Fed’s rate outlook: A cautious stance

Examining the Federal Reserve’s recent minutes release, there’s no indication of an imminent interest rate cut. Fed officials unanimously agree that policy measures should remain “restrictive” until a clear trend emerges, indicating a return to the central bank’s 2% inflation target.

As we navigate the post-turkey financial landscape, these insights offer a glimpse into the market’s historical patterns and the current forces shaping its trajectory. Whether you’re an investor or simply curious about economic trends, staying informed is the key to making sound financial decisions in the ever-evolving world of finance.