US stocks surged in November following a conclusive presidential election result with Republicans taking control of the White House and Congress. Policy intentions of the new administration, moderately positive corporate earnings reports, and a rate cut from the Federal Reserve (Fed) fueled stocks to their best month of the year, led by small caps in particular. A strengthening dollar, driven by expected future US-centric trade policies, along with anticipated tax cuts and deregulation, provided optimism to investors.
Internationally, stocks declined on concerns of impending US trade policy changes and a strengthening dollar. Political strain in France and Germany, and sticky inflation in Europe along with consumer weakness and pessimism regarding the recent stimulus package in China put a damper on international stocks.
Bonds rose in November as the Fed lowered its target interest rate by a quarter-percent, citing the risks of achieving its employment and inflation goals being roughly in balance. Unemployment ticked up but remained low, while progress on lowering inflation supported the change. The Bank of England also cut its policy rate despite seeing inflation creep up; international bonds gained as rate cuts in Europe are expected to continue amid signs of economic softening and slowing GDP growth.
Looking forward, economic data around inflation and unemployment, Fed decisions, and policies of the new administration will be big headlines as we move into the final month of a very strong year in the markets.
| Index Performance |
November |
Year to Date |
Trailing 12 Months |
| US Stocks (Russell 3000) |
6.65% |
27.71% |
34.49% |
| International Stocks (FTSE AW ex US) |
-0.83% |
8.17% |
13.66% |
| US Bond Mkt. (BBgBarc Int. Gov/Cred) |
0.62% |
3.64% |
6.05% |
| Cash (ICE BofA ML 3-Mo T-Bill) |
0.38% |
4.83% |
5.32% |