November proved to be a triumphant month for the Dow Jones Industrial Average, marked by a spirited rally on the final trading day. Investors' spirits were buoyed by a combination of slowing inflation rates and a series of corporate earnings that surpassed expectations. By the close of trading on Thursday, the Dow had surged by 520 points, or 1.5%. Meanwhile, the S&P 500 saw a modest rise of 0.4%, whereas the NASDAQ Composite experienced a slight decline of 0.2%.
The Dow's impressive 8% gain in November was its most robust performance since October of the previous year. The S&P 500 wasn't far behind, boasting an almost 9% increase, and the Nasdaq led the charge with a notable 10.7% jump. These gains represent the best monthly outcomes for both indices since July 2022, signaling a renewed optimism in market sectors.
The October personal consumption expenditures (PCE) price index, a preferred inflation metric of the Federal Reserve, indicated a halt in inflation, registering a 0% increase. This was slightly lower than the anticipated 0.1% rise and significantly down from the 0.4% seen last month. Consequently, the annualized inflation rate dropped to 3.4% from 3.7%. The core PCE inflation, considered a more precise measure of underlying inflation, also slowed to 3.5% from 3.7%. Despite these encouraging signs, the labor market remains stronger than expected, with initial jobless claims rising less than anticipated.
Treasury Yields React
Interestingly, Treasury yields appeared to dismiss these signs of slowing inflation. The yield on the 10-year Treasury note increased by 7.1 basis points, reaching 4.339%.
Corporate Highlights
- Salesforce Inc's Earnings: Salesforce Inc (NYSE:CRM) experienced a more than 9% surge following its uplifting annual guidance announcement. This was after Q3 results exceeded Wall Street's forecasts, largely due to effective cost-cutting measures that enhanced margins. Goldman Sachs predicts Salesforce will likely continue to expand its margin, especially once a macroeconomic recovery begins.
- Ford Motor Company's Guidance: After retracting its guidance in October due to uncertainties regarding labor strike costs, Ford Motor Company (NYSE:F) has reinstated its 2023 guidance. However, the new projection is slightly lower than the previous one, forecasting an operating profit between $10 billion and $10.5 billion, factoring in a $1.7 billion hit from production disruptions and an expected $8.8 billion cost associated with the new U.S labor agreement with UAW.
Federal Reserve's Outlook
The market awaits further insights from the Federal Reserve, especially in light of comments from Fed New York President Williams. Williams suggested that the Fed's rate-hike cycle may have reached its zenith but cautioned that hikes could resume if disinflation trends reverse. These remarks set the stage for a highly anticipated speech by Fed Chairman Jerome Powell, scheduled for Friday.
- Tesla's Cybertruck Launch: Tesla Inc (NASDAQ:TSLA) began delivering its much-anticipated Cybertruck electric pickup. Despite its higher-than-initially-announced price tag of $60,990, CEO Elon Musk remains optimistic about the electric truck segment.
- Microsoft and OpenAI: Microsoft (NASDAQ:MSFT) is set to secure a seat on OpenAI's board of directors, highlighting the tech giant's deepening ties with the AI firm, as announced by returning CEO Sam Altman.
Oil Market Dynamics
Oil prices experienced volatility, declining after OPEC+ members' decision to implement additional voluntary production cuts. These cuts, totaling about 684,000 barrels per day, were below the anticipated 1 million barrels. The announcement, made individually by OPEC+ members rather than through the secretariat, hints at potential divisions within the group.