Monthly Market Insights: December 2024

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U.S. Markets

Stocks notched solid gains in November as post-election enthusiasm and holiday shopping combined to fuel the advance.

The Dow Jones Industrial Average led, gaining 7.54 percent. The Standard & Poor’s 500 Index picked up 5.73 percent, while the Nasdaq Composite added 6.21 percent.¹

“The most serious mistakes are not being made as a result of wrong answers. The truly dangerous thing is asking the wrong questions.” -Peter F. Drucker, management consultant, educator, and author

Post-Election Rally

Despite a jittery start to November, stocks rallied following Election Day results and gained momentum following the Federal Reserve's second consecutive interest rate cut. An economic update that showed a 2.2 percent rise in third-quarter productivity helped support the move.^2,3,4

The combination of news pushed the S&P 500 to cross the 6,000 mark, while the Dow breached 44,000 for the first time.⁵

A Mid-Month Breather

After all three major averages hit record highs, markets took a breather as investors anxiously awaited fresh inflation data. News that retail and wholesale prices ticked up slightly in October sent markets down, even though both numbers were in line with economists’ expectations.⁶ Stocks remained under pressure after unexpected comments from Fed Chair Powell, who said the Fed wasn’t “in a hurry” to cut rates. Similar comments from another Fed official seemed to reinforce Powell’s sentiment and put additional pressure on stocks.⁷

Holiday-Shopping Optimism

But year-end optimism, especially around consumer spending during the holiday shopping season, re-started the rally. News that weekly jobless claims fell to a seven-month low also boosted momentum.⁸ Despite the headwinds from the Fed about rate adjustments, tough talk on tariffs and a handful of disappointing Q3 reports from technology companies, the S&P 500 and Dow Industrials each posted their best monthly gain of the year.⁹

Sector Scorecard

All S&P 500 sectors were positive in November. Financials (+10.46 percent) and Consumer Discretionary (+12.91 percent) led, with Communications Services (+6.91 percent), Energy (+7.83 percent), and Industrials (+7.59 percent) not far behind. Utilities (+3.78 percent), Real Estate (+4.17 percent,) and Consumer Staples (+3.87 percent) also showed up with solid returns. Technology (+5.17 percent), Materials (+1.49 percent), and Healthcare (0.37 percent) posted more modest gains compared with the S&P 500.¹⁰

What Investors May Be Talking About in December

In the month ahead, investors will most likely be monitoring a wide range of economic reports for clues about the Fed's thinking.

Specifically, investors will be watching holiday spending. A solid holiday shopping season can suggest a strong economy, which may prompt the Fed to reconsider its position on rate adjustments as it pursues its dual mandate of stable prices and maximum employment.

Also, expect any report on the jobs market to be scrutinized. Some recent numbers have been influenced by the anomalous effects of hurricanes and a worker strike in September, which may have influenced the final numbers. The Fed has a variety of weekly and monthly reports on the state of the jobs market.

The Fed's next scheduled two-day meeting ends on December 18. Fed Chair Powell has repeatedly said the Fed’s decisions are data-dependent, so all economic reports can factor into rate adjustment talks.

World Markets

The MSCI EAFE Index fell 0.74 percent in November, in stark contrast to U.S. averages that benefited from a post-election rally.¹¹

European markets were mixed. The United Kingdom rose 1.35 percent, and Germany picked up 2.88 percent. Meanwhile, Italy lost 3.64 percent, while France dropped 1.57 percent. Spain was flat (-0.27 percent).¹²

Emerging markets were also mixed. Egypt fell 0.52 percent, while India added 0.52 percent.¹³

Pacific Rim stocks were generally lower. Japan’s Nikkei and China’s Hang Seng were among the hardest hit. Australia was a bright spot, picking up 3.38 percent.¹⁴

Indicators

Gross Domestic Product (GDP)

The economy grew at 2.8 percent on an annualized basis in Q3, which was in line with economists’ expectations. While third-quarter GDP was below Q2’s 3.0 percent pace, it was still more than double the Q1’s 1.3 percent growth.¹⁵

Employment

Employers added 12,000 jobs in October, a drop from September’s revised 223,000 job gain. Economists had expected 100,000 new jobs created last month, considering the impact of two East Coast hurricanes and a worker's strike at one of the largest U.S. aircraft manufacturers. Unemployment remained unchanged at 4.1 percent–in line with expectations.¹⁶

Retail Sales

Retail sales rose 0.4 percent in October over the prior month—slightly more than expected.¹⁷

Industrial Production

Industrial output fell 0.3 percent in September, weaker than consensus expectations of a 0.2 decline. The Industrial output fell by 0.3 percent in October–the second consecutive month of declines. The effect of the hurricanes and the workers’ strike dragged on output.¹⁸

Housing

Housing starts fell 3.1 percent in October, hitting its lowest level since July. The dip was driven by lower single-family starts, especially in the South and Northeast regions.¹⁹

Sales of existing homes rose 3.4 percent in October, higher than economists expected, as tentative home buyers came off the sidelines to take advantage of a brief dip in mortgage rates and improved inventory. The median existing home sales price was $407,200, a 4 percent increase from a year prior.²⁰

New home sales fell 17.3 percent in October after a strong September. Year over year, new home sales were down 9.4 percent. The median new home sales price in October was $437,300, 4.7 percent higher than the previous year. There were 481,000 unsold new homes on the market, representing 9.5 months of inventory—up from 7.7 months in September.²¹

Consumer Price Index (CPI)

Consumer prices rose 0.2 percent in October over the prior month and 2.6 percent from a year earlier—a slight increase from September’s 2.4 percent year-over-year increase. Both numbers were in line with economists’ expectations, but they highlighted the bumpy road to the Fed’s 2 percent inflation goal. Core CPI, which excludes food and energy, grew 3.3 percent on an annualized basis—unchanged from September’s core reading. Core inflation was in line with expectations.²²

Durable Goods Orders

Orders of manufactured goods designed to last three years or longer rose 0.2 percent in October, slightly below consensus expectations of 0.5 percent. Both civilian and defense aircraft orders rebounded sharply in October, contributing to the rise in overall durable goods orders.²³

The Fed

The Federal Reserve cut short-term interest rates by 0.25 percent following its November meeting, bringing the benchmark Fed Funds Rate target range to 4.5 percent to 4.75 percent. At Fed Chair Jerome Powell’s post-meeting press conference on November 7, he signaled less certainty on the pace of future rate adjustments. He explained the ongoing need to weigh the risks of a resurgence in inflation and a cooling labor market.²⁴

The FOMC’s next meeting is scheduled for December 17-18.

By the Numbers: Trends in Charitable Giving

• Total amount Americans gave to charitable causes last year: $557.16 billion²⁵
• Total amount donated by individuals: $374.40 billion²⁵. Foundations gave $103.53 billion
• Average one-time gift amount: $121²⁶
• The average annual donation amount of a middle-income earner: $3,296²⁵
• Average monthly gift amount: $25²⁶
• Amount donated to nonprofits on Giving Tuesday last year: $3.1 billion²⁶
• The portion of annual revenue nonprofits raise during the month of December: 30%²⁷
• The portion of annual revenue nonprofits raise during the last three days of the year: 10%²⁷
• The number of 501(c) organizations in the U.S.: 1.8 million²⁵

• The proportion of charitable donors who also volunteer for their nonprofit: 85%²⁷
• The average value of one volunteer hour: $31.80²⁷
• The proportion of volunteers who also donate to their nonprofit: 76%²⁷
• Matching gift funds that go unclaimed every year: $6–$10 billion²⁷