The month is barely over and traders are already calling it the most eventful in financial markets since the end of the euro crisis in 2012.
The title is hardly hyperbole. Almost any way you view it, November has been eventful – and then some.
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Numbers & Sentiment Are Up
Finishing the period, the Dow Jones industrial average rose for the 6th day out of 7 closing Wednesday up 1.98 points at 19,123. The Dow’s 30-stock average was up 5.4% for the month, set 8 records in November and crossed 19,000 for the first time Nov. 22.
Buying stocks and selling bonds fueled the fire and many on Wall Street expect that trend to continue for the balance of the year. With home prices increasing, consumer net worth up dramatically, low unemployment and wage growth all happening at once, the mood is generally upbeat.
Reflation Trade Is A Thing
Buying stocks and selling bonds increased in intensity as the month wore on. Financial and industrial shares saw a surge as investors bet on the “reflation trade.”
Bets on this “reflation trade” drove a surge in financial and industrial shares. Goldman Sachs Group Inc. (NYSE:GSC), UnitedHealth Group Inc. (NYSE:UNHC) and Caterpillar Inc. (NYSE:CATC) ended up on top by percentage at Wednesday’s close.
Oil Shoots Up On Production Cut Pact
As the Organization of the Petroleum Exporting Countries reached a deal Wednesday to reduce oil output, crude oil prices shot up more than 8%. This followed many months of uncertainty that the group would ever come to agreement.
OPEC said it would cut production by 1.2 million barrels a day from 33.6 million barrels. The organization said it expected producers outside the group, including Russia, to chip in with additional cuts of 600,000 barrels a day.
Along Comes Shale
Flying in the face of OPEC’s action is the fact shale producers now have an incentive to ramp up their production. This could potentially wipe out the impact of the OPEC production cut.
For now, oil is up. Shares of more than 50 U.S. exploration and production companies climbed more than 10% following OPEC’s action.
Oil prices surged and shares of more than 50 U.S. exploration-and-production companies climbed more than 10% following the agreement.
Bank Stocks Lead The Way
Bank stocks in general will likely have had the best month in many years led by Bank of America Corp. (NYSE:BACC). That stock rose 28% in November 35% since the end of the second quarter. Others in the mix include JPMorgan Chase & Co. (NYSE:JPMC), Citigroup Inc. (NYSE:CC), Wells Fargo & Co. (NYSE:WFCC) and Morgan Stanley (NYSE:MSC).