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US Markets

November 2022 Review and Outlook

Executive summary

  • Powell reaffirms smaller rate hikes ahead
  • Inflation is still hot, with CPI at 7.7%, but less than feared
  • Equity markets rallied strongly into the month’s end
  • Yield curve remains deeply inverted

Index performance for November:

Index performance for November

On the last day of November, Federal Reserve Chair Jerome Powell spoke at the Brookings Institute, signaling a downshift in the pace of tightening of interest rates (read smaller hikes) could happen as early as their next meeting in December. He added that more rate hikes will be needed to tame inflation and said that the ultimate terminal rate may be higher than previously thought. The Federal Reserve has raised the target range for the federal funds rate six consecutive times, the last four being three-quarter point increases, pushing borrowing costs to their highest levels since 2008. Fed fund futures are now pricing a 77% chance of a 50-basis point rate hike at the December meeting. Yesterday that probability stood at 66%.

Midterm elections have (mostly) concluded with Republicans winning enough seats in the House of Representatives to constitute a majority when the 118th Congress is seated in January. The Democrats will retain control of the Senate regardless of the outcome of the Georgia runoff. Historically, a divided congress following a midterm election, with a Democrat in the White House, is good for stocks. A split government makes it harder for major policy changes to take place, offering some stability to investors. Inflation and hawkish FOMC policy aimed at combatting elevated inflation continue to be at the forefront of investors’ decisions. 

Geopolitics continues to impact the markets. The war in Ukraine, China’s Zero Covid policy and the risk of a global recession are high on the list. Markets reacted favorably to expectations that China is loosening its Zero Covid policy following Beijing’s announcement this week that they are speeding up the rate of Covid injections to the elderly. Accordingly, the Hang Seng Index had its best monthly performance (+27.3%) in 24 years (October 1998). Chair Powell discussed supply chain constraints and their impact on inflation and said Chinese shutdowns may hurt supply chains. If China’s Zero Covid starts to soften, this should help in reducing global inflation as supply chain issues start to ease.

For the month, on a total return basis, the Nasdaq 100 Index advanced 5.6%, the Nasdaq Composite rose 4.5%, the S&P 500 gained 5.6%, the Dow added 6.0% and the Russell 2000 rose 2.3%. Materials, Industrials and Utilities led sector returns, helping the Dow.

Rate Hike Odds

The table below shows the number of implied rate hikes anticipated by the market via fed fund futures pricing. Currently, the market expects a 50bp rate increase at the December Fed meeting.

Rate Hike Odds
Implied Overnight Rate & Number of Hikes/Cuts

Sector performance total return for November:

Sector performance total return for November

S&P 500, one year:

S&P 500, one year

Russell 2000, one year:

Russell 2000, one year

Nasdaq-100, one year:

Nasdaq-100, one year


The yield on the benchmark U.S.10-year Treasury now sits at 3.60%, below the October peak of 4.25%. The 30-year yield moved back below 4% mid-month and now sits at 3.74%. Yield on the shorter-term 2s recently touched 4.72% (ahead of the September CPI print and the highest level we have seen since 2007) but pulled back at month’s end to settle at ~4.31%. The falling yields helped equities rally in November. 

The yield curve remains inverted, with two-year treasuries yielding more than 10-year maturities.

10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity

10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity

2-year Treasury yield, one year: 

2-year Treasury yield, one year

10-year Treasury yield, one year: 

10-year Treasury yield, one year

30-year Treasury yield, one year: 

30-year Treasury yield, one year

Holiday Sales

A record 196.7 million Americans went shopping in stores or online over the Black Friday weekend (Thanksgiving - Cyber Monday), according to the National Retail Federation (NRF). This was nearly a 9.4% increase from last year’s 179.8 million shoppers. Early stats show sales were robust. Adobe Analytics reported online sales on Cyber Monday totaled $11.3 billion, up 5.8% from 2021 and Black Friday online sales were $9.12 billion, 2.3% above 2021’s $8.92 billion. The NRF estimates U.S. retail holiday spending for November and December will increase by a record 6-8% for the year compared to 2021, to the tune of ~$950 billion. 

The S&P Retail Index (+7.3%) posted a strong month as consumer spending increased for the third consecutive month. This bodes well for the U.S. economy, as consumer spending accounts for nearly two-thirds of our GDP.   

S&P Retail Index – November:

S&P Retail Index – November

Earnings commentary

Earnings season has nearly concluded, and corporate profits for the S&P 500 grew modestly in Q3’22. According to Bloomberg data, the average upside beat was 2.90% for the quarter, while sales increased by 2.59%. The earnings growth rate stood at +3.42%, while sales growth rose 11.48% (mostly led by Energy). Sectors that saw outsized growth included Energy (+149%), Real Estate (+19%) and Industrials (+17%), while Communications (-21%), Financial (-16%) and Materials (-16%) declined. Though Q3 earnings growth was lower than expected at the beginning of the quarter and is expected to be slightly negative in Q4, the results were strong enough to support equity valuations as peak Fed tightening appears in sight.

Sector Earnings Surprise
Sector Earnings Growth


Volatility subsided into month’s end following the mid-month CPI release and Jerome Powell’s speech at the Brookings Institute. The CBOE Volatility Index (or VIX), also known as the fear-gauge, sank nearly 20% in November from a high of 26.50 to start the month, getting as low as 20.50 before ending with a 20 handle.  

VIX - November:

VIX - November

VIX, two-year:

VIX, two-year

Economic commentary

The U.S. Department of Labor’s November 4th Employment Situation Report for October did show some weakness but was overall a strong report posting better than expected numbers on job creation (+261,000 new vs. +193,000 consensus) and hourly wages (+0.4% vs. +0.3% M/M and +4.7% vs. +5.0% Y/Y). September nonfarm payrolls were revised up to +315,000 from +263,000, while the August nonfarm payrolls were revised down to +292,000 from +315,000. The unemployment rate did tick higher to 3.7% vs. September’s 3.5%, while the labor force participation rate declined to 62.2% from 62.3% M/M. 

October’s headline CPI increased less than expected, helping drive the peak inflation theme and possibly compel the Fed to be less aggressive with future rate hikes. Total CPI increased 0.4% M/M vs. consensus +0.5% and is up 7.7% Y/Y, a decline of 0.5% from September and below consensus of +7.9% for the month. Food costs increased again, but less than expected (+0.6% M/M and is now up 10.9% Y/Y). This was the smallest monthly increase in the food index since last December. Energy increased 1.8% after declining 2.1% in September and is now up 17.6% Y/Y. Less food and energy, core CPI increased 0.3% M/M and +6.3% Y/Y, both below consensus.

PPI increased less than expected in October (+0.2% vs. +0.4% consensus, which included a downwardly revised +0.2% in September). On a Y/Y comparison, the index for final demand decreased to +8.0% vs. +8.5% in September. The index for final demand, less foods and energy, was unchanged from September. Despite these stats still being unacceptably high, the numbers did coincide with the disinflation print we saw in the headline CPI numbers, giving investors the belief that the Fed will take a less aggressive rate hike approach into year-end on the peak inflation theme.

The U.S. Consumer spent robustly last month, a sign of economic strength that complicates the Fed’s goal of taming inflation. October retail sales (which do not adjust for inflation) jumped 1.3% (consensus +1.0%). Ex-autos, retail sales increased 1.3%, beating the consensus of +0.5%. 

U.S. Initial Jobless Claims increased to their highest level since August. For the week ending November 19, new claims were 240,000 (consensus 225,000) and well above the three-month average of 218,000. Continuing jobless claims increased to 1.551 million, also above the three-month average of 1.426 million.

The U.S. Department of Commerce released the second estimate for Q3’22 GDP showing stronger growth at +2.9% (consensus was +2.8%), better than the advance estimate of +2.1%. The GDP Chain Deflator (price index) was revised up to 4.3% from 4.1%.

The Conference Board’s Consumer Confidence Index fell to 100.2 (consensus of 100) from a downwardly revised 102.2 (from 102.5) in October. The November Present Situation Index declined to 137.4 from 138.9, and the Expectations Index declined to 75.4 from 78.1. The Conference Board notes that when the Expectations Index is below 80, the likelihood of recession remains high.

CPI Inflation – MoM:

CPI Inflation – MoM

CPI Inflation – YoY:

CPI Inflation – YoY



Oil prices declined nearly 7% in November. WTI traded as high as $123.70 back in March, a 14-year high. YTD, oil is up 7.15% but is off nearly 35% since that March high.

According to AAA data, the average cost of a gallon of regular gas in the U.S. is $3.495, down $0.26 or 7% from last month. One year ago, the average price of regular unleaded was $3.39.

Crude Oil front month contract for November: 

Crude Oil front month contract for November


Gold spot prices rose as much as 9% in November before settling up 8.26%. Since the March high of $2050, gold is down 13.7%. For 2022, gold is down 3.3%.



Persistent levels of elevated inflation in a rising rate environment continue to accelerate the U.S. dollar rally. The world’s largest reserve currency made a new two-decade high above $114 in September but has since retraced some of those gains. The U.S. Dollar Index declined 5% in November but has gained nearly 11% YTD.



The collapse of FTX will play out in the courts and press for the foreseeable future. This sent ripples throughout the space on solvency and government oversite (both domestic and abroad) concerns. Bitcoin declined nearly 27% in November, making a new 52-week low of $15,3631.95 before rallying back late in the month to close down only 16.5%. YTD, Bitcoin is down over 63%. Though large losses are involved, the situation has not caused disruption in the stock market to date.


Looking ahead

The CPI disinflation equity rally helped save a dismal start to the month, giving credence to the peak inflation theme. Chair Powell’s commentary on the last day of the month lowered the fear of another 75-point basis hike, sparking an end-of-month rally. The main question for the market is: Does the Fed follow through on what was telegraphed today? Key releases to watch include the November jobs report (12/2), PPI (12/9), CPI (12/13), FOMC Rate Decision (12/14) and retail sales (12/15). With less than five weeks left in 2022, is a Santa Claus rally in the cards?

The information contained herein is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. All information contained herein is obtained by Nasdaq from sources believed by Nasdaq to be accurate and reliable. However, all information is provided “as is” without warranty of any kind. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The Market Intelligence Desk Team


Nasdaq’s Market Intelligence Desk (MID) is designed to provide critical touch-points for timely trading analysis and market information.

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