Welcome to December! November was the best month of the year, and the optimism is strong. Stock futures were slightly lower on Friday morning, with the Dow Jones Industrial Average flatlining after it had notched a new 2023 high and capped off its best month in more than a year.
All eyes will be on the FED to see what this next move will be. Investors are waiting to see what Federal Reserve Chair Jerome Powell will say later Friday at 11 a.m. ET. November’s big rally was due in part to investors beginning to believe the Fed was done raising rates and that the central bank may even start cutting them in the first half of next year. The Fed next decides on rates on Dec. 13.
Disney shares moved up nearly 0.4% in premarket trading after the entertainment giant reinstated its dividend. Ulta Beauty jumped 11.4 % on strong quarterly results.
Despite November’s upbeat market sentiment, investors should remain cautious into year-end and 2024. There is a tremendous amount of profit in the market after the November rally and year-end portfolio adjustments will be made.
We would expect a pull back in the market and for it to start to broaden out. The market is currently overbought but for many of the right reasons. The economy is strong, inflation is coming under control, earnings have moderated well, and the job picture is still strong.
Earnings reports from Dominion Energy, Gartner and Cardinal Health will be released on Friday. Construction spending for October and ISM Manufacturing data for November will also be released.
It’s crucial to be cautious in the wave of optimism. Stay methodical, patient, and disciplined in investment decisions is vital. Stocks don’t move in a linear fashion, but more like a stair step path. Growth stocks have seen success in the past month, urging investors to practice patience and risk management, and to wait for the right moment to invest in growth. Opportunities will emerge in due course. Focus should be on risk management first, followed by growth. Through discipline, achieving both is possible. With the right opportunities, we will be ready to take advantage of the opportunities.
Key Points:
- Investor sentiment is positive, with expectations that the Federal Reserve may begin cutting rates in 2024.
- Despite the positive market sentiment, investors should exercise caution due to profit-taking and year-end portfolio adjustments.
- A market pullback and broader market participation are anticipated.
- The current market overbought position is justified by strong economic fundamentals.
- Investors should remain methodical, patient, and disciplined in their investment decisions.
- Opportunities for growth will emerge, and risk management should be prioritized.
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