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December Market Update
Stuart Brisgel
November proved to be a pivotal month for long-term investors in the U.S. stock market, marking a significant turnaround from October's dynamics.

Impressive Gains in Major Stock Indexes
The stock market experienced robust growth during the month. The S&P 500 surged by 8.92%, while the Nasdaq 100 increased by 10.67%. The Dow Jones Industrial Average also saw a notable rise of 8.77%, signaling strong investor confidence.

Federal Reserve's Impact on Market Sentiment
The Federal Reserve's latest moves have sparked a wave of optimism among investors. Despite holding interest rates steady in their November 1st meeting, the market sentiment is tilting towards a possible easing of rates, with some even anticipating the first rate cut as early as May 2024. This sentiment was further bolstered by the 97.1% probability of unchanged rates at the upcoming December meeting, as per the CME FedWatch Tool.

Labor Market Trends: A Cooler Outlook
October's non-farm payroll data revealed a slight cooldown in the job market, with 150,000 jobs added versus the expected 170,000. The auto strikes notably impacted manufacturing jobs, though sectors like healthcare and construction remained strong. This softening is seen by many as a sign that the Federal Reserve's tightening measures are beginning to take effect.

Consumer Inflation Trends: A Positive Turn
November also brought encouraging news on the inflation front, with the Consumer Price Index rising by just 3.2% year-over-year, a figure below expectations. Core inflation, excluding food and energy, slowed to its lowest annual pace since September 2021, at 4%. These figures, coupled with falling energy prices, suggest that the peak of inflation may be behind us.

Consumer Sector Resilience
Despite a slight decline in retail sales in October, consumer confidence rebounded in November. This resilience in consumer behavior underscores the strength of the economy, despite ongoing challenges such as rising interest rates and inflationary pressures.

Bond Markets and Mortgage Rates
The easing of inflation and a slowing employment growth have led to a decrease in government bond yields. The 10-Year Treasury Note Yield, for example, dropped over 50 basis points from October, closing the month at around 4.351%. This decline is a boon for prospective mortgage borrowers and reinforces the attractiveness of long-term investment in U.S. equities.

Market Volatility and Sentiment
Market volatility saw a significant reduction in November, with levels returning to those seen before the pandemic. This decrease in volatility, along with declining costs of S&P 500 put options, indicates growing market confidence.

The Broad Perspective
November was a testament to the resilience of the market, showcasing a substantial recovery in investor sentiment and financial metrics. The decrease in inflation and cooling job market, though seemingly negative, align with the Federal Reserve's goals and suggest a stabilizing economy.

As we look ahead, it's important to stay informed and consider long-term investment strategies. We're keen to hear from you—how are your end-of-year plans shaping up? For any significant financial decisions, especially those related to taxes, consulting with a tax advisor is recommended.

At B1 Financial, we remain committed to keeping you informed and helping navigate these dynamic times. Stay tuned for more updates and insights as we move into the closing stages of the year.
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