Stocks end November with a bang
The Dow Jones Industrial Average jumped 520 points on Thursday, marking the end of November with a strong performance. Financial markets also posted their biggest monthly gain in over a year.
The Dow closed at 35,951, rising 1.5% and providing investors with a positive outlook. The optimism was fueled by a new government report indicating a continued easing of inflation. The Personal Consumption Expenditures index, which is the Federal Reserve's preferred inflation gauge, fell to 3.5% in October (excluding volatile food and energy prices). This is a decrease from 3.7% the previous month and a significant drop from the nearly 5% recorded in May.
Source: https://www.bea.gov/news/2023/personal-income-and-outlays-october-2023
The decline in inflation, particularly after the Consumer Price Index reached a peak of 9.1% in June 2022, has raised hopes among investors that the Federal Reserve will abandon its efforts to cool economic growth by increasing borrowing costs. Some analysts on Wall Street are now predicting that the central bank could even reduce its benchmark interest rate by the middle of 2024.
Wall Street analysts are also increasingly confident that the U.S. will dodge a recession despite the Fed's aggressive campaign to quash inflation. Although job growth has slowed — pushing the nation's unemployment rate to 3.9%, the highest level since January of 2022 — most economists now think the labor market will avoid the kind of steep downturn that historically has followed rapid increases in interest rates.
All three leading stock indexes posted solid gains in November. The Dow rose 8.8%, while the broader S&P 500 added 8.9% — its biggest monthly increase since July of 2022. Driven by strong corporate profits, the tech-heavy Nasdaq jumped nearly 11% in November.
"The rally has been dramatic in its move," said Quincy Krosby, chief global strategist for LPL Financial.
"What you want to see is that next leg up as we close the year," she said. "November is a strong month for the market, but so is December."
—The Associated Press contributed to this report
