Don’t listen to the bears: The incredible rally in stocks this month isn’t over yet. Despite a slight pullback Monday, the major averages bounced back Tuesday and are looking to lock in their fifth consecutive winning week. The Dow and S & P 500 are on track to finish November — ending with Thursday’s close — 7% and 8.4% higher, respectively. The tech-heavy Nasdaq is pacing for a nearly 11% return for the month. November has certainly been living up to its reputation as the strongest month of the year back to 1950 — crushing its average S & P 500 gain of 1.7%, according to the Stock Traders Almanac. .SPX ALL mountain Long term look at the S & P 500 index We don’t see any reason to curb our enthusiasm for stocks heading into the final month of 2023. In fact, we see several positive catalysts for the market— in addition to December’s track record as the third-best month of the year for the S & P 500 since 1950 with an average increase of 1.4%, according to the Stock Traders Almanac. December also includes the potential for a Santa rally in the last five trading days of the year and the first two trading days of the new year. Let’s start with three important trends that we’re seeing right now. Interest rates, which the Federal Reserve has been hiking since March 2022 to bring down inflation, appear to have peaked. This is important because higher policy rates, and the resulting increase in bond yields, have been a drag on stocks as they serve to reduce the present value of future earnings. While off their 16-year highs but still elevated, higher-yielding bonds also provide competition to stocks for income-oriented investors. Energy prices seem to be stabilizing. After a surge in late September to over $93 per barrel, the price of oil has been leveling off in the $70 to $80 per barrel range. This is good news for stocks because energy represents a nearly unavoidable expense for consumers and a major input cost for companies. Third-quarter earnings have…
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