The S&P 500 (SPY – Get Rating) bounced an impressive +8.92% in November. And now stocks are pressing up against the highs of the year looking ready for more.
At this stage the pace of gains will slow. Probably more of a melt up scenario for stocks given the bullish bias of the holiday season.
Meaning this is the stage that investors will be more discerning about what they buy instead of everything bouncing from bottom. And that is the stage that favors quality and value…the exact kinds of stocks we place in our portfolio.
As noted in my article from earlier in the week, we have a bull market til proven otherwise. The only thing to be on guard about is signs of economic weakness that increase the odds of recession.
Gladly right now things are looking pretty solid on that front with a +2.1% GDP estimate from the coveted GDPNow. Helping to potentially improve that picture is that Chicago PMI (focused on manufacturing) came in Thursday at a surprisingly strong 55.8 versus an abysmal 44.0 last month.
Chicago PMI is not typically a market moving event. But insiders know that it is the best leading indicator of what shows up in the vital national report, ISM Manufacturing which comes out Friday morning. This bodes well for an improvement in this sector that is beneficial to the overall economy.
Looking ahead investors should be watchful for these other key reports:
12/5 ISM Services- this has been the healthier part of the economy leading to solid GDP readings of the past. In general, when employment is solid, and consumers have money in their wallets…they will spend it pushing our economy forward.
12/8 Government Employment Situation- Monthly jobs adds have been easing, and more importantly, wage inflation has slowed. Keeping on that track is a goldilocks reading for this economic report.
12/12 CPI & 12/13 PPI- These key inflation reports have been trending nicely lower for several months which is a big part of the bull market returning in 2023. The better this looks…the sooner the Fed considers lowering rates in 2024…the faster the economy will grow…the higher…
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