Thought of the Week
As Americans gathered around the Thanksgiving table last week and recited what they were thankful for, market performance may have made the list, with 60/40 portfolios up 12% this year after a challenging 2022. The path hasn’t been smooth, with a regional banking crisis, war in the Middle East and hawkish Fed policy all challenging markets. However, good news outweighed the bad news, and disinflation, pandemic savings cushions, supported housing prices and new industrial fiscal policies from the Inflation Reduction Act all contributed to economic resilience that surprised many expecting a recession. The biggest surprise though was likely the strength of U.S. large-cap growth against the winds of aggressive monetary tightening. The “Magnificent 7” is up over 70% this year and accounts for 94% of S&P 500 YTD returns. The sudden progression of AI into mainstream culture has not only inspired consumer excitement about the sophistication of AI technologies but also sharpened investment focus, with over 35% of S&P 500 companies mentioning AI in 3Q23 earnings transcripts and global private investment projected to reach $200bn by next year.
Looking ahead, it’s an exciting time to be an investor. AI should remain investable for the long haul, with the rapidly developing AI industry suggesting opportunities will broaden beyond the top 7 stocks. For investors wary of overextended markets, there are plenty of stocks that haven’t seen the same run-up in valuations this year, with the remaining S&P 500 only up 3.5% YTD. In short, markets continue to present opportunities for investors either looking to add risk with growth or defensiveness with value, and leaning into active management should allow investors to weather what could be another year of surprises ahead.
The week in review
- Consumer sentiment rose to 61.3 from the prelim 60.4
- Durable goods orders fell 5.4% and 0.0% ex-auto
- Existing home sales dropped to 3.79M from 3.95M
The week ahead
- New home sales
- Personal income and consumer spending
- 3Q23 GDP (2nd est.)
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Originally Posted November 27, 2023 – Weekly Market Recap
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Past performance does not guarantee future results.
Diversification does not guarantee investment returns and does not eliminate the risk of loss.
Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors.
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