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