Year End Volatility For Equities - Global Equity Market Overview
Major U.S. equity indices stabilized in November as markets reassessed October’s pullback. The Dow Jones Industrial and S&P 500 indices made up of larger cap stocks rebounded over 1.5% in November, outpacing the tech heavy Nasdaq index for the month.
Emerging market equities rebounded in November as the dollar’s rise slowed and investors found value in various developing economies. Ongoing tariff and trade tensions have been hampering capital investment and trading arrangements for companies in the emerging markets.
Many hope that U.S. companies will use excess cash for capital investment rather than for stock buybacks, which has been a primary use of cash for many domestic companies.
Some analysts expect that the Fed’s perceived slow down in rising rates, along with the trade and tariff arrangements that occurred as a result of the G20, may prove positive and supportive for the markets following weeks of rampant volatility. Some companies have been holding back on hiring and capital expenditures until a resolution is finally achieved on trade.
There is a growing notion that the markets are headed towards a period of lower capital appreciation because of subdued economic and earnings growth. Economically sensitive sectors including industrials and consumer discretionary have pulled back in sync with technology and energy since the beginning of October.
Sources: S&P, Dow Jones, FRED, Bloomberg