After two months of declines, the S&P 500^® rallied in November, climbing 10.75% for the month as the nation elected a new president. The S&P 500, in fact, reached a new all-time high, eclipsing the 3,600 mark and finishing the month at 3,621.63.

The NASDAQ Index and the MSCI EAFE Index fared even better. The NASDAQ was up 11.80% for the month of November and the MSCI EAFE Index (which tracks developed-economy stocks in Europe, Asia and Australia) was up 15.38%. Oil prices, which have been in a severe slump since the COVID-19 pandemic began, also posted strong gains in November, with the price of West Texas Intermediate, a grade of crude oil used as a benchmark in oil pricing, climbing 26.68% for the month.

Drilling down

U.S. stocks rise

The S&P 500 Index was up 10.75% in November – from 3,269.96 at the October close to 3,621.63 at the end of November. The total return of the S&P 500 (including dividends) was 10.95% for November. Year-to-date, the total return of the S&P 500 was 14.02%. (The S&P 500 is a market-cap-weighted index that represents the average performance of a group of 500 large capitalization stocks.)

The NASDAQ Index also posted a strong gain in November, up 11.80%. Year-to-date, the NASDAQ was up 35.96%. (The NASDAQ – National Association of Securities Dealers Automated Quotations – is an electronic stock exchange with more than 3,300 company listings.)

Retail sales continue recovery

Retail sales have continued to recover from the earlier lockdown, although thousands of stores, restaurants and small businesses continue to face financial challenges due to the pandemic. According to the Department of Commerce retail report issued November 17, retail sales were up 0.3% in October from the previous month, and up 5.7% from October 2019. Total sales for the three-month period of August through October were up 5.1% from the same period a year earlier.

The increase in retail sales has been led by surging online sales. Non-store sales (primarily online) were up 3.1% from the previous month in October and up 29.1% from a year earlier. Automobile sales also remained a key driver in the retail market, up 0.7% from the previous month in October and up 11.3% from a year earlier. Home improvement projects during the pandemic continued to drive strong growth in the building materials and garden supplies category, with sales up 0.9% from the previous month in October and up 19.5% from a year earlier. Food and drinking establishments continued to lag, with sales down 0.1% for the month and down 14.2% from a year earlier. Department store sales, which rallied in September, relapsed in October, down 4.6% for the month and down 11.9% from a year ago.

Unemployment trends lower

Weekly unemployment claims declined modestly in November from nearly 800,000 claims per week in October to about 750,000 weekly claims in November, according to the Department of Labor. The overall unemployment rate has continued to decline, as previously laid-off workers have begun returning to their jobs. According to the Department of Labor Employment Situation Report issued November 6, the unemployment rate declined in October for the sixth consecutive month, from 7.9% in September to 6.9% in October. However, the rate is still nearly double the pre-pandemic rate in February of 3.5%. Average hourly earnings ticked up $0.04 for the month to $29.95.

All 11 sectors post gains

Led by strong rebounds in the Energy and Financial sectors, all 11 sectors of the S&P 500 gained ground in November. Energy was up 22.38% followed by Financials, up 15.59%, Industrials, up 14.31%, and Materials, up 11.63%.

The chart below shows the results of the 11 sectors for the past month and year-to-date:

Treasury yields nearly unchanged

The yield on 10-year U.S. Treasuries was nearly unchanged in November, ticking down from 0.85% at the October close to 0.84% at the end of November. The yield had dropped precipitously in March when the Federal Reserve cut the Fed funds rate to a range of 0 – 0.25% in an effort to buoy the economy. It remains well below the 2019 year-end rate of 1.92%.

Oil prices rally

Oil prices moved up in November, with the price of West Texas Intermediate gaining 26.68% for the month – from $35.79 at the October close to $45.34 at the end of November – as development of a new COVID-19 vaccine raised expectations that worldwide air and auto travel would ultimately return to normal. However, oil prices were still down 25.75% for the year.

International equities rise

International equities rallied in November along with U.S. stocks. The MSCI EAFE Index was up 15.38% in November. It was up 0.83% year-to-date.