by Mariann Montagne, CFA
Stocks
In a marked change from the trend toward mega-cap growth stocks during the better part of this year, small- and mid-cap value and growth stocks drove the markets higher last week. The Russell 2000, which is heavily weighted to small- and mid-caps, increased 3.12%. The U.S. benchmark S&P added 0.83% while the Nasdaq gained 0.41%. Overseas, the developed markets index (MSCI EAFE) rose 0.40% and the emerging markets index (MSCI EEM) gained 0.20%. In the U.S. the best performing sectors were real estate and materials while communication services and energy were the laggards.1
Fixed Income
Bond values rose as interest rates declined, with the benchmark 10-year treasury yield ending at 4.22%, down 25 basis points for the week. This is a 76 basis point (or 0.76%) drop from the year’s peak close of 4.98% reached on Oct. 192 when inflationary concerns were much higher.
Commodities
Gold (GLDM), an Endowment Series and Precious Metals strategy holding, reached $2,083.40 per troy ounce last Friday, up 3.37% for the week and its peak so far this year.3 The precious metal’s increase has been driven by both lower bond yields (less competition for gold which produces no income) and demand for safe haven assets in a period of geopolitical concerns around the Middle East. The yellow metal is up 13.77% from early October, just before the outbreak of war in Israel and Gaza.
Economic Data
The index of manufacturing continued to indicate slowing in November, contracting for the 13th consecutive month as manufacturers trim production and employment in response to soft demand. At 46.7, the index was equal to October’s read and slower than the consensus estimate.4 Note anything above 50 indicates growth.
Retail inventories were unchanged in October, ending several months of inventory builds. This follows a downward revised 0.4% rise in September. Motor vehicles at dealers have been lifting retail inventories and continued to do so in October. However, excluding vehicles, retail inventories in October fell 0.9% from the prior month. On a year-over-year basis, inventories excluding vehicles declined 0.8%.5
Company News6
Interest rate sensitive financials and real estate holdings Alexandria Realty (ARE), a Contrarian Choice and G50 holding, Blackstone Inc. (BX), a G50 holding and Charles Schwab Corp. (SCHW), a Contrarian Choice, Core Select and G50 holding, were up sharply with the stock market rally and the drop in interest rates. ARE rose 12.32%, BX added 6.80% and SCHW was up 11.93%.
Palo Alto Networks Inc. (PANW), a Core Select and G33 holding, shares rose 10.04% as cyber security stocks remain strong performers boosted by last week’s quarterly report from CrowdStrike Holdings (CRWD)7 which beat consensus expectations.
Did you know…
Elephants are tremendous distance swimmers. They can swim for up to 6 hours and 25 miles. These goliaths are so buoyant that if they become tired in the water, they can just rest by floating and will not sink. They can also use their trunk as a snorkel and dive.
Mariann Montagne, CFA
Portfolio Management Consultant
Sources:
1 JP Morgan Weekly Market Recap 12-4-23
3 Apmex
4 Institute for Supply Management Manufacturing Report 12-1-23
6 All weekly changes in company stock prices: Yahoo Finance