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Monthly Market Wrap: November 2021

Welcome back to the Monthly Market Wrap from YCharts, where we break down the most important market trends for advisors and their clients every month. As always, feel free to download and share any visuals with clients and colleagues, or on social media.

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You’ve probably heard: the talk of the town lately has been inflation, inflation, inflation. Even as wages and hourly earnings rise to all-time highs, much of that “getting ahead” feeling is canceled out by rising prices.

This leads to one effect of inflation that is sometimes less discussed: the decline of the US dollar’s purchasing power. Since 2007, the greenback’s purchasing power has tumbled 27% as consumer prices have risen nearly 36% over the same time. Though the USD has strengthened against other currencies, as illustrated by the ICE US Dollar Index’s 14.6% increase, investing in a dollar-tracking index wasn’t enough to offset weakened purchasing power.

US Inflation Rate versus Purchasing Power of the US Dollar

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Late in November, the emergence of a new COVID-19 variant brought additional uncertainty to markets. The fifth variant of concern, Omicron, not only keeps with the Greek lettering tradition but early reports suggest that while highly contagious, symptoms are milder for those who happen to contract it. If true, investors might relieve themselves of some of that uncertainty.

Before getting too caught up in the holiday season, take a look at these key developments from the second-to-last month of 2021:

Off the YCharts! NEW Scatter Plot Tool

Major Index Returns: Omicron Wipes Out November Gains

Sector Movement: 9 of 11 Negative in November, but Technology Flies High

Hot Stocks of the Month: Semiconductors Ignite Gains

Laggards & Losers: Consumer Stocks Weighed Down by Varying Issues

Economic Data: Jobless Claims Reach Lowest Level in Over 50 Years


Off the YCharts! NEW Scatter Plot Tool

We’ve been hard at work to bring you a new tool in YCharts: Scatter Plot. With Scatter Plot, you have even more ways to illustrate security and portfolio performance. Scatter Plot also enhances the ways advisors and asset managers communicate with their clients about portfolios and investment strategies using YCharts.

For example, you can compare a client or prospect’s current portfolio against your own model on an efficient frontier,

Portfolio efficient frontier scatter plot

…or visualize the risk and return for a group of securities. The example below illustrates that of the $1T+ market cap companies, Tesla (TSLA) is the most high-risk, high-reward play!

Scatter Plot of $1 trillion market cap companies

For more Scatter Plot features and use cases, check out this post or watch our 5-minute tutorial.


Major Index Returns: Omicron Wipes Out November Gains

Major Index Returns for November 2021

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In what was shaping up to be a decent month for equity indices, the Omicron variant quickly wreaked havoc in the latter part of November. The NASDAQ was the only major index to finish the month positive, up just a third of a percent. After moving 2.2% higher, the S&P 500 turned negative in November and ended 0.7% lower. Omicron took a larger toll around the world, with MSCI Emerging Markets and International Developed Markets tumbling 4.1% and 4.6%, respectively. Outside of equities, the variant’s spread led fixed income investors to believe central banks will continue cutting rates, causing the Global Aggregate Bond Index to slip 0.3% and high-yield corporate bonds by 1%.


Sector Movement: 9 of 11 Negative in November, but Technology Flies High

SPDR ETF Sector Movement, November 2021

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After an October where all 11 sectors finished in the black, the near opposite happened in November. Technology and Consumer Discretionary—the only two positive sectors in November—rose 4.5% and 1.6% respectively. The technology sector’s gains were powered by revenue growth in the semiconductor industry (no pun intended), namely NVIDIA (NVDA) who reported 55% higher YoY sales earlier in the month. On the consumer discretionary front, vehicle makers such as Ford (F) and General Motors (GM) were largely responsible for driving the sector higher (seriously, no pun intended there either) with growing EV sales. On the downside, Energy fell 5% mainly due to crude oil retracing from $80, Financials were down 5.7% as credit services firms reported slowdowns in transaction processing and sales, and Communication Services slid the most—6.1%—with gaming and entertainment companies leading the decline.


Hot Stocks of the Month: Semiconductors Ignite Gains

Top ten performing S&P 500 stocks for November 2021

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As mentioned earlier, and in case this table didn’t give it away, November was a big month for the semiconductor industry. Shares of Qualcomm (QCOM), Advanced Micro Devices (AMD), NVIDIA (NVDA), Xilinx (XLNX), Micron Technology (MU), and Lam Research (LRCX) were all higher in November as these companies reported revenues well above expectations. The revenue beats stemmed from sustained demand for semiconductors as manufacturers get closer to meeting demand. Investors also piled into COVID-19 vaccine manufacturer Pfizer (PFE) after it was reported the Omicron variant may challenge the effectiveness of currently available vaccines. If that’s the case, manufacturers such as Pfizer would likely have to alter their current vaccine offerings and sell new doses, the prospects of which sent its share price up 22.8% in November.

Dollar Tree (DLTR), Arista Networks (ANET), and HP (HPQ) also made the cut for November’s ten best performers in the S&P 500.


Laggards & Losers: Consumer Stocks Weighed Down by Variety of Issues

Worst performing S&P 500 stocks, November 2021

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Investors in Penn National Gaming (PENN) cashed out early in November as the company reported disappointing revenues and the founder of its Barstool Sports-branded sportsbook, Dave Portnoy, got caught up in a negative news cycle. PENN’s 28.4% drop is enough to take the title for worst performing S&P 500 stock in November. In other CEO-related negative news, shares of Activision Blizzard (ATVI) plummeted 25.1% as reports emerged the company’s CEO Bobby Kotick was aware of cases of sexual misconduct at the company but failed to report them. This follows a lawsuit filed by the State of California against Activision back in July over the same matter. Finally, the travel industry was once again stopped in its tracks by concerns over the dominant Omicron and Delta variants spreading wider. Particularly affected were cruiseliners Norwegian Cruise Line Holdings (NCLH) and Carnival (CCL), down 24.1% and 20.5%, respectively.

Gap (GPS), DISH Network (DISH), PayPal (PYPL), Organon & Co (OGN), Paycom Software (PAYC), and Autodesk (ADSK) round out November’s ten worst performers.


Featured Market & Advisor News

Highest Number of S&P 500 Companies Citing “Inflation” on Q3 Earnings Calls in Over 10 Years (FactSet)

The Best Performing Mutual Funds in Each Category and How to Find Them (YCharts)

Vanguard plants flag in China with active equity fund (InvestmentNews)

5 Weak Links of the Broken Global Supply Chain (YCharts)

Nearly 40 New ETFs Launched in October (WealthManagement.com)

The New and Improved Inflation Hedge with Chris Dunn (YCharts)


Economic Data: Jobless Claims Reach Lowest Level in Over 50 Years

Employment

November’s unemployment rate clocked in at 4.2%, falling for a fifth consecutive month and setting a new low since March 2020. In a development that surprised many, weekly claims for unemployment dropped to 199,000 for the week of November 20th, marking the first time jobless claims were below 200,000 since 1969 (then spiking up to 222,000 for the week of November 27th). However, the labor force participation rate of 61.8% is still 1.5 percentage points below its pre-pandemic level. One driver of the employment picture could be that more people are leaving their jobs than ever, with the US Quits Rate standing at a record 3% as of September.

US Unemployment Rate, US Labor Force Participation Rate, US Weekly Jobless Claims from December 2000 through November 30th 2021

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Production and Sales

US Retail and Food Services Sales rose 1.7% in October, while the US ISM Manufacturing PMI checked in at 61.1. Anything above 50 indicates expansion in the manufacturing sector, and November’s reading marks the ninth month out of the last 12 where the PMI was over 60.

Housing

Following a September in which US New Single Family Houses Sold surged 14% MoM, that figure was nearly flat in October, rising 0.4%. Existing Home Months’ Supply was flat as well, at 2.4. Muted housing activity caused the US house price index to notch its smallest increase—0.9%—since June of 2020.

Consumers

The American consumer stayed strong in October, as consumer spending (PCE) increased 0.6% MoM. However, prices rose even faster—the US Consumer Price Index jumped 0.9%, the highest month-over-month change since June 2008.

 

Have a great December! 📈

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