Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Monthly Market Wrap: November Stumbled To A Close But 2021YTD Still Looks Good

By Investing.com (Charley Blaine/Investing.com)Stock MarketsDec 01, 2021 06:35
ca.investing.com/analysis/monthly-market-wrap-november-stumbled-to-a-close-but--2021ytd-still-looks-good-200494559
Monthly Market Wrap: November Stumbled To A Close But 2021YTD Still Looks Good
By Investing.com (Charley Blaine/Investing.com)   |  Dec 01, 2021 06:35
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Investors were optimistic when November trading opened. October had just produced the best monthly returns in a year.

Interest rates were still low, even if the Federal Reserve was starting to warn that it was time to get ready for "normalized" rates—a polite way of saying interest rates would rise next year. Employment was growing with jobless claims falling and wages moving higher.

Excitement accelerated as the major averages kept closing at new highs. The NASDAQ 100 Index was up as much as 4.6% for the month on Nov. 19.

But mid-month, inflation worries—centered around rising gasoline prices, higher food prices, skyrocketing housing costs—began to weigh on stocks. Then, suddenly, this past Friday, after news of a new, possibly vaccine-resistant COVID-19 variant, Omicron, emerged, the bottom appeared to fall out of the market.

Ongoing Omicron Worries; Faster Tightening On Tap

Equities slumped again on Tuesday to finish out the month.

That occurred in part after the Financial Times, on Monday, was told by Moderna (NASDAQ:MRNA) CEO Stéphane Bancel that existing immunizations may not be as effective against the Omicron variant as they have been against other strains. Investors rapidly retreated back to risk-off positions after fears had briefly subsided during Monday trading.

Perhaps a bigger market catalyst however, was Fed Chairman Jerome Powell, who pointedly told the Senate Banking Committee on Tuesday that the Fed wanted to rein in inflation and would start the clock ticking toward a first-rate hike earlier than expected.

As a result, yesterday saw another nasty bout of selling. When markets closed to finish out November, the selling had wiped out monthly gains for the Dow Jones Industrial Average and the S&P 500 and substantially trimmed returns for the NASDAQ Composite and NASDAQ 100.

Nonetheless, barring a December disaster, stocks are poised for a strong 2021 performance. The S&P 500 is up 21.6% year-to-date. The Dow has gained 12.7%, and the NASDAQ is higher by 20.6%. The NASDAQ 100 is up 25.2%.

The selling pressure since Friday reflected the following unknowns:

1. How dangerous the variant might actually be and whether existing vaccines would continue to be strong enough protection. Investor jitters were visible via cruise-line stocks, airlines and other travel related names.

DIS 300 Minute Chart
DIS 300 Minute Chart

Even entertainment giant Disney (NYSE:DIS) got hit. Shares of the entertainment giant finished Tuesday down 2% to $144.90 after hitting a 52-week low of $143.11.

2. When exactly and how is the Fed going to make its move to beat down inflation?

The short answer to the central bank question: Powell told a Senate hearing Tuesday—shocking markets in the process—that maybe the economy is too hot. So, the Fed will first stop buying bonds to help support the economy, the Fed chair said. The process, known as tapering, is scheduled to end this coming spring.

Once the Fed stops buying bonds, the Central Bank will then start to raise rates. How soon afterward and how high rates may go is not clear. Wall Street doesn't see huge rate increases because that could derail everything.

For the record, the benchmark 10-year Treasury note closed at 1.477% on Tuesday, well off its Mar. 30 peak of 1.766%.

Powell's very deliberate comments should not have surprised. He had said after the Fed's early November meeting that the central bank was going to get out of pumping billions of dollars a month into the economy.

Post-Powell's testimony on Tuesday it was hard to find a rising stock. Apple (NASDAQ:AAPL) was the top Dow stock on the day. Merck (NYSE:MRK) had a small gain. But energy and financial stocks were the day's weak performers and sectors.

Energy shares fell because crude sagged. The story for the month was no better, with West Texas Intermediate falling 21% to $66.18 per 42-gallon barrel during the month, surprising traders who had speculated oil could hit $90 a barrel or more. (Still, retail gasoline held steady at $3.39 a gallon, according to AAA's Daily Fuel Gauge Report.)

Many other commodities were lower too, including cotton, down 7.3%. But coffee jumped 13.9% to $2.324 a pound.

Even Bitcoin was hit by the November sell-off, peaking at $68,925 on Nov.10 and falling 17.1% over the rest of the month to $57,144.

BTC/USD 300 Minute Chart
BTC/USD 300 Minute Chart

Don't cry too much for crypto players however, Bitcoin is up 97.3% on the year.

Semiconductors, technology and homebuilding were the sector leaders. Laggards included energy, aerospace, commodity stocks and biotechs.

Splits And Spinoffs Ramp Up; IPOs Escalate

Another unexpected development during November: four mega cap companies either announced they were going to break up their businesses or completed the effort: IBM (NYSE:IBM) completed its Kyndryl (NYSE:KD) spin-off, while Toshiba (OTC:TOSYY), Johnson & Johnson (NYSE:JNJ) and General Electric (NYSE:GE) announced they were heading toward business splits. The idea is that breaking the companies will unlock heretofore hidden value.

None of the four got much reward for their decisions. Newly split IBM/KD stocks fell 6.4% and 48%, respectively. General Electric shares fell 9.4%. JNJ shares were off 4.3%; their breakup won't come until 2023. Toshiba's U.S. shares were off 7.9%.

The initial-public-offering market was highly active. Renaissance Capital says 388 companies have gone public via traditional IPOs. Another 558 have gone public by merging with special purpose acquisition companies (SPAC). Both are at record levels. That said, many IPOs have struggled once they debuted on public markets.

The Renaissance Capital IPO Index was off 5.6% in November, after a 6.6% gain in October.

IPO Index vs SPX 1Y Chart
IPO Index vs SPX 1Y Chart

Chart courtesy Renaissance Capital

For the year, the index is down 7.67%. Renaissance also sponsors an exchange-traded fund, Renaissance IPO ETF (NYSE:IPO), that buys shares in companies that have gone public. The ETF was off 8.1% in November after a 6.6% October gain. For the year, the ETF is down 2.3%.

There was one big exception: electric truck maker Rivian Automotive (NASDAQ:RIVN) went public on Nov. 9 at $78 and ended the month at $119.76 up 55%.

RIVN 300 Minute Chart
RIVN 300 Minute Chart

Its market cap of $105.8 billion is bigger than General Motors (NYSE:GM) and Ford (NYSE:F) even though it has minimal production and faces heavy investments needed to build production facilities. Still, the shares were up 53% in the month.

Rival Lucid Group (NASDAQ:LCID), which aims to sell luxury electric cars, was up 42% in November after a 43% gain in October. The company had gone public in July via a SPAC merger. Since then, the shares have doubled.

Here's what else an investor might want to know about market activity during November:

Large-cap stocks were the market's biggest drivers. Chipmaker NVIDIA (NASDAQ:NVDA), a key supplier to the burgeoning infrastructure surrounding cryptocurrencies, added 27.8% on top of a 23.4% gain in October. Apple was up about 10.35% after a 6% gain in October. Microsoft (NASDAQ:MSFT) added 5.9%. Costco Wholesale (NASDAQ:COST) rose 9.7%.

Who's on top? Apple once again. The iPhone/iPad colossus reclaimed the title of most valuable U.S. stock from Microsoft, which had become number 1 on Oct. 29. Apple's market cap hit $2.629 trillion. Microsoft was at $2.527 trillion. Amazon (NASDAQ:AMZN), Google-parent Alphabet (NASDAQ:GOOGL), and Tesla (NASDAQ:TSLA) also sport market caps of more than $1 trillion. Facebook-parent Meta Platforms (NASDAQ:FB) topped $1 trillion on June 28 but dropped back below $1 trillion the next day.

Smaller-cap stocks were pressured at month's end. The S&P 600 small-cap index and the S&P Midcap 400 fell back 2.4% and 3.1%, respectively, for the month. But the declines came after the small cap index vaulted to a 6% gain at the beginning of the month. The mid cap index was up as much as 4% in November before falling back.

Signs of market stress? Barchart.com's daily calculation of net-new-52-week highs and lows has been negative for nine straight sessions. Tuesday's market activity produced 29 new highs and 673 new lows.

Investors paid attention when indexes became too pricey. The major benchmarks—Dow, S&P 500, NASDAQ and NASDAQ 100—pulled back whenever their relative-strength indices moved above 70, which occurred on multiple days in early to mid-November. RSI measures price momentum.

Top five S&P 500 stocks for November

  • Qualcomm (NASDAQ:QCOM) +35.72%
  • Advanced Micro Devices (NASDAQ:AMD) +31.72%
  • NVIDIA) +27.81%
  • Xilinx (NASDAQ:XLNX) +26.92%
  • Dollar Tree (NASDAQ:DLTR) +24.19%

Bottom five S&P 500 stocks for November

  • Penn National Gaming (NASDAQ:PENN) -28.45%
  • Gap (NYSE:GPS) -27.15%
  • Activision Blizzard (NASDAQ:ATVI) -25.05%
  • Norwegian Cruise Line Holdings (NYSE:NCLH) -24.14%
  • DISH Network (NASDAQ:DISH) -23.91%
Monthly Market Wrap: November Stumbled To A Close But 2021YTD Still Looks Good
 

Is Apple Undervalued?

Based on 15 different premium valuation models, we calculate whether Apple stock is undervalued or overvalued every day. If you are considering Apple for your portfolio, you need to check this out:

See Fair Value Now
Unlock Apple's unbiased fair value with InvestingPro+

Related Articles

Monthly Market Wrap: November Stumbled To A Close But 2021YTD Still Looks Good

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email