“November Surge: Stock Funds Rebound with 9.1% Average Gain, Paving the Way for Double-Digit Returns Investors Poised for Promising Trends Ahead.”
Stocks rallied in November, adding to the year-to-date gains for stock funds. After a three-month decline, the average U.S. stock fund rose 9.1% in November, as per Refinitiv Lipper data. This has expanded the year-to-date gain for stock funds to 13.4%. While the year hasn’t been spectacular for the average fund, double-digit gains seem to be achievable if December is productive, which appeared unlikely a few weeks ago. This would be a turnaround from last year, where the average U.S.-stock fund fell 18.4%, having rallied in the previous three years.
As always, it’s mainly about the Fed. Investors were satisfied that the latest inflation and economic data would allow the Federal Reserve to control inflation without inviting a recession. The possibility of the Fed cutting interest rates next year is also speculated.
Markets have factored in a Fed that has completed its rate-hike cycle. Moreover, they are even more sensitive to the possibility that the Fed will initiate an interest-rate cutting campaign by mid-2024, if not sooner, says Quincy Krosby, chief global strategist for LPL Financial in Charlotte, N.C.
Large tech stocks continued to dominate the market in November. The Nasdaq Composite Index is up nearly 37% so far this year. Lipper’s large-cap growth fund category, which focuses on stocks powered by corporate-earnings potential, rallied 11% in the month, extending the year-to-date gain to 34%.
International stock funds also rose 8.6% in November, leaving them with a 10.8% average annual gain.
Bond funds also had their biggest rally in years. Investment-grade debt funds rose an average of 4.5% to push them into the black at 2.0% this year. Lauren Goodwin, economist and portfolio strategist at New York Life Investments, says the Fed relief rally is here. She added that they agree with the bond market that Fed cuts may be possible next year, but only if inflation and wage conditions are on track to be significantly tamer than they are today.
