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January 2024 Monthly Market Update

Posted on by Angie Burgess

January 2024 Market Update

US stocks posted modest gains to start the year. The Dow Jones Industrial Average rose 1.3%, the S&P 500 advanced 1.7%, and the NASDAQ added 1.0%. Large-caps fared better than Small-caps in January–the Russell 1000 index increased 1.4%, while the Russell 2000 dropped 3.9%. Growth outperformed value within both indices.

Five of eleven sectors had a positive start to 2024. Communication Services was January’s sector leader with a 4.4% gain, followed by Financials at 3.1%. The laggards this month were Materials, Consumer Discretionary, and Real Estate, the last of which posted a 4.8% decline.

The U.S. Economy added 353,000 jobs in January, nearly doubling expectations of 185,000. Unemployment and labor force participation remained unchanged at 3.7% and 62.5%, respectively. New home sales rebounded strongly in December, while mortgage rates stayed the same month-over-month. The 15-year Mortgage Rate was just below 6% as of February 1st.

Treasury yields had an uneventful start to the year as longer-term treasuries posted slight increases. The 30-year rose 19 basis points to 4.22%, the most of any duration. The 1-month, 6-month, and 1-year T-Bills all fell by single-digit basis points. The largely muted activity in treasury yield movement translated into little movement by short-term bond ETFs, though the iShares 20+ Year Treasury Bond ETF (TLT) fell 2.3%.

 

Chappell Wealth Watch! Magnificent Seven vs. Magnificent Six

One of the top headlines from 2023 was the outperformance of the “Magnificent Seven” mega-cap stocks: Alphabet (GOOG, GOOGL), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), NVIDIA (NVDA), and Tesla (TSLA).

However, Tesla has been the underperformer of this group over the past twelve months. The electric vehicle manufacturer has risen 8.1% since last February, and plummeted 24.6% last month alone. This chart shows the divergence of the Magnificent Seven vs. the Magnificent Six, which excludes Tesla. The latter is 12.8 percentage points higher on a TTM basis.

 

Equity Performance

Major Indexes

 

Value vs. Growth Performance

 

US Sector Movement

 

Top 10 S&P 500 Performers

 

10 Worst S&P 500 Performers

 

Economic Data

Employment

January’s unemployment rate stayed unchanged at 3.7%, as did the labor force participation rate at 62.5%. The US unemployment rate has now come in at 3.7% for three consecutive months. 353,000 new jobs were added in January according to nonfarm payroll data, far surpassing the expected increase of 185,000.

Consumers and Inflation

The US inflation rate for December clocked in at 3.35%, marking a slight MoM increase. Inflation has hovered between 3-4% since May. Core Inflation slowed to 3.93% in December, the first time it has fallen below 4% since May 2021. The monthly US Consumer Price Index rose 0.3% in December, and monthly US Personal Spending increased 0.7%. The Federal Reserve held its key Fed Funds Rate at 5.50% at its January 31st, 2024 meeting, marking the Fed’s fourth consecutive meeting in which rates were left unchanged.

Production and Sales

The US ISM Manufacturing PMI jumped two points higher to 49.1 in January, bringing it within one point of crossing into expansion territory. December US Retail and Food Services Sales rose 0.55% MoM, while the YoY US Producer Price Index increased 0.98%.

Housing

MoM US New Single-Family Home Sales rebounded by 7.97% in December after two consecutive monthly declines. However, MoM US Existing Home Sales slipped 1.1%. The Median Sales Price of Existing Homes fell for the sixth straight month to $382,600 in December, a monthly decline of 1.3%, and is 6.7% below its all-time high set in June 2023. Mortgage rates had little movement to start the year; the 15-year Mortgage Rate was 5.94% as of February 1st, and the 30-year stood at 6.63%.

Commodities

The price of Gold declined 2.1% in January to $2,018.50 per ounce. Crude oil prices pushed higher in January; the price of WTI ended the month at $75.84 per barrel while Brent was $83.99, with respective monthly increases of 6.9% and 8.1%. The average price of gas fell 2 cents per gallon in January despite the higher oil prices, closing the month at $3.21/g.

 

Fixed Income

US Treasury Yield Curve

 

Bond Fund Performance

December 2023 Market Update

Posted on by Angie Burgess

December 2023 Market Update

Stocks rallied into the end of the year. The Dow Jones Industrial Average rose 4.9%, the S&P 500 advanced 4.5%, and the NASDAQ jumped 5.6%. Small-caps had a particularly standout month, as the Russell 2000 surged 12.2% in December. For the year, the Dow logged a 16.2% gain, the S&P 500 added 26.3%, and the NASDAQ blazed higher by 44.6%.

All eleven sectors posted a positive December. Real Estate led the way with an 8.8% increase, followed by a 7.1% advance in Industrials and 6.1% in Consumer Discretionary. Technology, Communication Services, and Consumer Discretionary were the best-performing sectors in 2023, while three sectors recorded a down year: Energy, Consumer Staples, and Utilities.

Mortgage rates retreated lower in December as the 15-year fell below 6% for the first time since May 2023, and the 30-year ended below 7% for the first time since mid-August. The average retail price of gas reached its lowest level of 2023 in December, which was $3.18 per gallon.

Treasury yields fell further in December as investors continued to pile into equities. Longer-term instruments saw larger declines, as yields on the 20-year and 30-year fell by 52 and 51 basis points, respectively. The 5-year and 10-year both tumbled below 4%. However, bond ETFs experienced price appreciation in December as a result of falling yields; the iShares 20+ Year Treasury Bond ETF (TLT) popped higher by 8.7%, and the iShares Core US Aggregate Bond ETF (AGG) rose 3.7%.

 

Chappell Wealth Watch! 2023 S&P 500 Winners & Losers

Out of the 503 S&P 500 constituents, 322 of them posted positive returns in 2023. In other words, about two-thirds of the S&P 500 (64%) had a good year.

Who were the best and worst performers in 2023? The best: NVIDIA (NVDA) took the crown with a whopping 238.9% increase. Meta Platforms (META) was a close second at 194.2%, followed by Royal Caribbean Group (RCL), which bounced back 162% in 2023 after slumping 63% between 2020-2022.

The worst performers in 2023: Enphase Energy (ENPH), FMC (FMC), and Dollar General (DG), which ended the year down 50.1%, 49.5%, and 44.8%, respectively.

 

Equity Performance

Major Indexes

 

Value vs. Growth Performance

 

US Sector Movement

 

Top 10 S&P 500 Performers

 

10 Worst S&P 500 Performers

 

Economic Data

Employment

November’s unemployment rate retreated two-tenths of a percentage point lower to 3.7%, as the labor force participation rate rose to 62.8%. 199,000 jobs were added in November according to nonfarm payroll data, slightly above the expected increase of 190,000.

Consumers and Inflation

The US inflation rate continued its YoY slide, falling to 3.14% in November which is the lowest print in 5 months. Core Inflation slowed to 4.01%, its lowest YoY level since September 2021. The monthly US Consumer Price Index inched 0.1% higher, and monthly US Personal Spending grew a quarter of a percent in the same month. The Federal Reserve held its key Fed Funds Rate at 5.50% at its December 13th, 2023 meeting, marking the Fed’s third consecutive meeting in which rates were left unchanged.

Production and Sales

The US ISM Manufacturing PMI remained unchanged at 46.7 in November and in contraction territory for the 13th consecutive month. November US Retail and Food Services Sales rose 0.28% MoM after contracting for the first month in the last eight, while the YoY US Producer Price Index fell for the second straight month to 0.86%.

Housing

US New Single-Family Home Sales plummeted 12.2% MoM in November while US Existing Home Sales inched 0.8% higher MoM. However, the Median Sales Price of Existing Homes fell for the fifth straight month to $387,600 in November. The median price of existing homes is 6.33% below its all-time high. Mortgage rates continued their cooldown into December; the 15-year Mortgage Rate ended the year at 5.93%, below 6% for the first time since May. The 30-year closed out 2023 at 6.61%, falling below 7% for the first time since mid-August.

Commodities

The price of Gold ended the year at $2,062.28 per ounce, representing a monthly increase of 1.32%. Crude oil prices were largely unchanged MoM despite having encountered some price volatility within December. As of Christmas Day, the price of WTI per barrel was $75.84 while Brent was $80.23. December brought drivers the lowest average price of gas in 2023, which was $3.18 per gallon on December 18th. The last time the average price of gas was that low was June of 2021.

 

Fixed Income

US Treasury Yield Curve

 

Bond Fund Performance

November 2023 Monthly Market Update

Posted on by Angie Burgess

November 2023 Market Update

Stocks recorded a highly bullish November as the S&P 500 advanced 9.1%, the Dow Jones Industrial Average charged 9.2% higher, and the NASDAQ surged 10.8%. The Russell 1000 finished November up 9.3%, and the small-cap Russell 2000 added 9.1%. Global indices joined the party as well–Emerging Markets posted an 8.0% gain in November and EAFE jumped 9.3%.

Energy was the month’s sole negative sector, declining 0.7%. The Technology, Real Estate, Consumer Discretionary, and Financial sectors all posted double-digit gains in November.

Existing home sales declined for the fifth straight month while the median price of an existing home fell for the fourth month in a row. However, the 15-year Mortgage Rate backed off of 7%, a level it hadn’t reached since 2000. Both inflation and core inflation decelerated, and CPI was nearly unchanged MoM. The per-ounce price of Gold breached the key $2,000 level in November and is 1.5% off from its all-time high of $2,067.20.

Treasury yields tumbled in November as investors piled back into equities. Yields on the 5-year and 10-year treasuries fell by 51 basis points, the most out of any duration on the curve. The 1-month T-Bill ended November unchanged at 5.56%. Yields on certain global fixed-income instruments also dove lower in November.

 

Chappell Wealth Watch! November S&P 500 Winners & Losers

Out of the 503 S&P 500 constituents, 441 of them posted positive returns in November. In other words, 87.7% of the S&P 500 had a positive month.

However, finding an individual stock that outperformed the S&P 500 index’s 8.92% gain in November was a more difficult task. 250 of the 503 constituents posted a return higher than the S&P 500 index’s November gain, giving just about a 50-50 chance of picking a company that would’ve beaten the index.

 

Equity Performance

Major Indexes

 

Value vs. Growth Performance

Trailing Twelve Months

 

US Sector Movement

 

Top 10 S&P 500 Performers

 

10 Worst S&P 500 Performers

 

Economic Data

Employment

October’s unemployment rate increased one-tenth of a percentage point to 3.9%, while the labor force participation rate decreased by that same amount to 62.7%. October nonfarm payroll data showed 150,000 jobs added, falling short of the 170,000 expected for the month.

Consumers and Inflation

The US inflation rate decreased to 3.24% in October, down from 3.70% in September. Core Inflation decelerated for the seventh consecutive month, from 4.15% in September to 4.03% in October. The US Consumer Price Index was essentially unchanged MoM, and US Personal Spending grew at a below-average rate of 0.22% MoM.

Production and Sales

The US ISM Manufacturing PMI remained unchanged at 46.7 in November and in contraction territory for the 13th consecutive month. October US Retail and Food Services Sales contracted by 0.1% MoM, while the YoY US Producer Price Index fell eight-tenths of a percentage point in October to 1.34%.

Housing

US New Single-Family Home Sales MoM continued its up-and-down ways in October, contracting by 5.6% after having jumped 8.6% in September. US Existing Home Sales sank 4%, down for the fifth consecutive month and 19th out of the last 21. The Median Sales Price of Existing Homes fell for the fourth straight month, to $391,800 in October. Mortgage rates cooled down in November; the 15-year Mortgage Rate closed out the month at 6.56% after topping 7% for the first time since December 2000, and the 30-year ended November at 7.22%, down 0.79 percentage points since the end of last month.

Commodities

The price of Gold crossed above $2,000 in November to $2,035.50 per ounce as of November 30th. Crude oil went the opposite direction; the price of WTI oil fell 8.8% in November to $74.46 per barrel as of November 27th, while Brent slipped 8.4% to $79.49 per barrel in that same time frame. This helped deliver motorists a second consecutive month of lower prices at the pump, as the average price of regular gas fell 16 cents in November to $3.36 per gallon, its lowest level since the start of 2023.

 

Fixed Income

US Treasury Yield Curve

 

Global Bonds

October 2023 Monthly Market Update

Posted on by Angie Burgess

October 2023 Market Update

Stocks declined for the third straight month, with the Dow Jones Industrial Average falling 1.3%, the S&P 500 slipping 2.1%, and the NASDAQ giving up 2.8%. Globally, Emerging Markets fell 3.9% and EAFE lost 4.0%. Small and mid-cap stocks were the most adversely affected; the Russell 2000 dove 6.8%, while the large-cap Russell 1000 gave up only 2.4%.

After being the only US stock sector to finish in the black for the last two months, Energy was the biggest laggard in October, with a 5.8% decline. Only Utilities and Technology advanced higher in October, up 1.3% and 0.1%, respectively.

Mortgage rates continued to shoot higher as the 15-year Mortgage Rate breached 7% for the first time since 2000, while the 30-year Mortgage Rate approached 8%. Housing prices took a hit as a result; the Median Sales Price of Existing Homes fell for the third straight month and was below $400,000 for the first time since May. The Inflation rate essentially remained the same between September and October, though Core Inflation slightly decreased. Oil prices sank in October, helping to lower the average price of regular gas by 36 cents to $3.60 per gallon.

The yield curve trended toward normalcy in October. Yields on the 3-year, 5-year, 10-year, 20-year, and 30-year treasuries all increased by double-digits, with the 30-year logging the largest rise of 31 basis points. The 20-year and 30-year both eclipsed 5% for the first time since July 2007, ending the month at 5.21% and 5.04%, respectively. Italy’s Long Term Bond Interest Rate was overtaken by the US 10-year, and Japan’s 10 Year Government Bond Interest Rate neared 1% in October.

 

Chappell Wealth Watch! 2023 – A Year of Mega Caps

Just how important are the so-called “Magnificent Seven” stocks to the overall market this year?

If you invested in just the “S&P 7”– Apple (AAPL), Amazon (AMZN), Alphabet (GOOG, GOOGL), Meta Platforms (META), Microsoft (MSFT), NVIDIA (NVDA), and Tesla (TSLA) – on a market cap-weighted basis at the start of the year, you would have enjoyed a 50.7% return YTD.

Take those seven names out of the S&P 500, however, and the index is negative YTD.

It’s safe to say that the S&P 7 stocks have certainly played a prominent role in bringing the overall S&P 500 index up 9.2% YTD. The “Magnificent Seven” constitute roughly 29% of the S&P 500, making the index the most concentrated it has been in over 25 years.

 

Equity Performance

Major Indexes

 

Value vs. Growth Performance

Trailing Twelve Months

 

US Sector Movement

 

Top 10 S&P 500 Performers

 

10 Worst S&P 500 Performers

 

Economic Data

Employment

September’s unemployment rate was unchanged at 3.8%, as was the labor force participation rate at 62.8%. However, September nonfarm payroll data showed 336,000 jobs added, the most in the last eight months and handily surpassing expectations of 159,000.

Consumers and Inflation

At 3.70%, the US inflation rate for September was essentially unchanged from August’s 3.67% level. Core Inflation decreased for the sixth straight month, down from 4.35% in August to 4.15% in September. The US Consumer Price Index MoM rose 0.40% in September, while US Personal Spending MoM accelerated 0.74%. The Federal Reserve kept the benchmark Target Federal Funds Rate unchanged at 5.50% for the second consecutive FOMC meeting, which took place on November 1st.

Production and Sales

The US ISM Manufacturing PMI dove by 2.3 points in October to 46.7, breaking a streak of three consecutive monthly increases and returning to contraction territory. US Retail and Food Services Sales MoM grew by 0.71% in September, and the YoY US Producer Price Index rose by two-tenths of a percentage point to 2.17%.

Housing

US New Single-Family Home Sales MoM rebounded by 12.3% in September following an 8.2% contraction in August. September marked the largest MoM increase for new single-family homes since August 2022. US Existing Home Sales were down 2%, sinking for the fourth consecutive month and 18th out of the last 20. The Median Sales Price of Existing Homes fell below $400,000 for the first time since May to $394,300. September also marked the third consecutive month in which median prices for existing homes fell. Mortgage rates again reached new highs in October; the 15-year Mortgage Rate topped 7% for the first time since December 2000, and the 30-year ended the month at 7.79%.

Commodities

The price of Gold rebounded 6% in October, from $1,870.50 to $1,982.90. After breaching $90 per barrel in September, the price of WTI oil reversed course in October and ended the month at $83.03 per barrel, a decline of 8.5%. The price of Brent fell 5.35% to $90.73 per barrel but stayed above that key $90 level. Lower oil prices helped deliver drivers some relief at the pump, as the average price of regular gas fell 36 cents in October to end the month at $3.60 per gallon, its lowest level since March.

 

Fixed Income

US Treasury Yield Curve

 

Global Bonds

September 2023 Monthly Market Update

Posted on by Tom Schmitt

September 2023 Market Update

Stocks continued to decline in September as the Dow Jones Industrial Average fell 3.4%, the S&P 500 slipped 4.8%, and the NASDAQ ended 5.8% lower. Around the world, Emerging Markets were down 2.6%, and EAFE sank 3.4%. September’s declines dragged equities into the red for Q3. The Dow posted a 2.1% decline in Q3, the S&P 500 ended the quarter down 3.3%, and the NASDAQ 3.9% finished lower.

For the second straight month, Energy was the only US stock sector to post a positive return. Real Estate was the top laggard in September, tumbling 7.2%.

Regular gas prices topped $4 per gallon for the first time since October 2022. The higher gas prices resulted from a surge in crude oil prices. WTI crude oil briefly reached $90 per barrel in September–the first time since November 2022–while the price of Brent surged 7.7% to $94.01. Mortgage rates reached 20-year highs last month and pushed even higher in September. The 30-year mortgage rate surpassed 7% for the first time since April 2002.

Yields on longer-term treasuries increased in September as T-Bills ended the month broadly unchanged. The 20-year and 30-year bonds each rose by 53 basis points. The 10-year’s 50 basis point increase helped reduce the inverted 10-2 treasury yield spread to -0.44%. Yields on global fixed-income instruments rose as well. Italy’s Long-Term Interest Rate surged 74 basis points, Canada’s 10-Year Benchmark Bond Yield jumped by 53 basis points, and Japan’s 10 Year Government Bond now yields 0.77%, an increase of 11 basis points.

 

Chappell Wealth Watch! Mortgage Rates and the Fed Funds Rate

The prevailing 30-Year Mortgage Rate, and its 15-Year counterpart, tend to follow the 10-Year Treasury Rate more so than the Fed Funds Rate. Mortgages are backed by bonds and securities, which align more with an instrument like the 10-year treasury. In the Fed’s fight with inflation, they don’t directly target long-term instruments, but since rates of most shapes and sizes experience a ripple effect from the Fed’s actions, mortgage rates tend to do the same.

Since February 2022, the 30-Year mortgage rate has climbed over 3 percentage points to 7.19%. If the current rate hike cycle ends, the 30-Year Mortgage Rate and its 15-Year counterpart might experience a period of stabilization or even a slight decrease, as the 10-Year Treasury Rate could also stabilize or decline. This could lead to more favorable mortgage conditions for homebuyers.

 

Equity Performance

Major Indexes

Value vs. Growth Performance

Trailing Twelve Months

US Sector Movement

Top 10 S&P 500 Performers

 

10 Worst S&P 500 Performers

 

Economic Data

 

Employment

August’s unemployment rate rose to 3.8%, three-tenths higher than July’s figure of 3.5%. However, the labor force participation rate grew by two-tenths to 62.8%. August nonfarm payroll data showed 187,000 jobs added, surpassing expectations of 170,000.

Consumers and Inflation

YoY inflation rose for a second straight month, from 3.18% in July to 3.67% in August. Conversely, Core Inflation fell to 4.35% in August, marking the fifth consecutive monthly decline. The US Consumer Price Index logged a monthly increase of 0.63% in August, its most prominent in the last 14 months. US Personal Spending was up 0.45% MoM. The Federal Reserve kept the benchmark Target Federal Funds Rate unchanged at 5.50% during its recent September 20th meeting.

Production and Sales

The US ISM Manufacturing PMI increased by 1.4 points in September to 49.0. This is the third consecutive monthly increase as the key manufacturing index approaches 50, the dividing line between expansion and contraction. US Retail and Food Services Sales grew by 0.56% MoM in August, and the YoY US Producer Price Index jumped to 1.6%.

Housing

US New Single-Family Home Sales contracted 8.7% in August, following a July in which new home sales grew by 8.0%. US Existing Home Sales sank for the third consecutive month, down 0.7%, and 17th out of the last 19. The Median Sales Price of Existing Homes inched 0.3% higher to $407,100, staying above $400,000 for the third straight month. Mortgage rates pushed higher in September; 15-year and 30-year Mortgage Rates ended the month at 6.72% and 7.31%, respectively.

Commodities

The price of Gold fell 3.7% in September, from $1,942.30 down to $1,870.50. WTI oil per barrel briefly reached $90 in September, ending the month at $89.68, an increase of 7.3%. Brent rose 7.7% in September to $94.01 per barrel. As a result, the average price of regular gas also eclipsed $4.00 per gallon in mid-September, settling at $3.96 as of September 25th.

Fixed Income

US Treasury Yield Curve

Global Bonds