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We are delighted to share our November Market Outlook which provides you with our current thinking on the economy, markets and portfolio positioning. In addition, we’ve shared the key economic statistics that we are watching closely.

Economy & Markets

  • The election of Donald Trump as President along with Republicans likely controlling Congress has caused economists and investors to reassess their views of future economic growth.
  • The equity market had a 1,500-point rally in the Dow Jones Index the day after the election as investors believed a Trump economy could lead to higher growth in 2025.
  • International markets showed investors were more concerned that a Trump Administration would likely impose tariffs on trade. The Dollar rose, along with interest rates, as the latest data on the health of the U.S. economy pointed toward continued growth in 2025.

Equities

  • The S&P 500 ended October down -0.91% following late month pressure in the market’s largest sector--technology. Despite the weakness, year-to-date market returns remain robust with the S&P 500 higher by 21% through the first 10 months of the year. Expectations for continued strong corporate profit growth remain in place for this year (+9%) and next (+13%).
  • Performance in 2024 continues to be led by sectors directly benefitting from the rise of AI, albeit all 11 sectors have produced positive returns year-to-date. Market participation narrowed somewhat in the month following a 3rd quarter that saw returns broaden beyond the “Magnificent 7” names. Growth stocks continue to outperform value for the year while domestic large cap performance leads both the mid and small cap groups by a wide margin.

Fixed Income

  • The yield curve continued to steepen as the market digested better economic reports and additional easing of monetary policy by the FOMC.
  • Credit spreads tightened, but are still not showing any signs of stress, signaling comfort with the economic outlook.

Employment

  • The October employment report was very disappointing, with only 12,000 jobs created versus an expectation for 100,000. The impact of two Hurricanes and a Boeing strike took a toll on job creation. Surprisingly, the unemployment rate remained at 4.1%.
  • Worker productivity grew by a very solid 2.2% in the 3rd quarter. This level of productivity growth should give the Fed more latitude to cut interest rates into 2025.

Federal Reserve

  • The Fed cut interest rates by 25-basis points at its November meeting which took place just two days after the election. This latest cut follows the 50-basis point cut in September. The final meeting of the year takes place in December where investors hope for another 25-basis point cut.
  • Fed Chairman Powell said the Fed would not be adjusting policy based upon the election. He reaffirmed that the Fed would continue being data driven.

Issues to Watch

  • The sheer volume of topics being raised by the election of Donald Trump, whether focused on immigration, tax policy, trade or geopolitics has led to an incredible amount of analysis as to the impacts of these various policy initiatives. These policy changes will undoubtedly have an impact on our overall asset allocation positioning and investment implementation.

a chart depicts economic metrics for November 2024

1Data provided by Bloomberg. Metrics are as of month-end or most recent publication
2Provided by U.S. Real GDP Economic Forecast Survey Median 
3Provided by World Real GDP Economic Forecast Survey Median 
4Provided by Bloomberg Intelligence Forecast 
5Provided by World Probability Forecast 
6Arrows represent a month-over-month change

a chart depicts index returns for November 2024

Asset Allocation / Tactical Positioning - November 2024

A chart depicts asset allocation and tactical positioning for November 2024

1Equity tactical weights are relative to the Cambridge Trust Core Equity allocation and is comprised of 80% S&P 500 and 20% MSCI AC World ex-U.S. Index. 
2Fixed Income tactical weights are relative to the Cambridge Trust Core Taxable allocation and is comprised of 100% Barclays Intermediate Gov/Credit Index. 
3Below investment grade holdings include high yield and emerging market debt mutual funds. Represents an out-of-benchmark allocation that will be reflected as an overweight position relative to the Barclays Intermediate Gov/Credit Index if any allocation is held. 
4Alternative tactical weights represent an out-of-benchmark allocation that will be reflected as an overweight position when utilized and neutral position when not. 
5Direction arrow highlights any recent changes of the overall allocation after a recent tactical asset allocation or strategy change. Last changes were made at September 2024 Asset Allocation Committee meeting.

Cambridge Trust Wealth Management is a division of Eastern Bank. Views are as of November 2024 and are subject to change based on market conditions and other factors. The opinions expressed herein are those of the author(s), and do not necessarily reflect those of Eastern Bankshares, Inc., Eastern Bank, Eastern Bank Wealth Management, Cambridge Trust Wealth Management or any affiliated entities. Views and opinions expressed are current as of the date appearing on this material; all views and opinions herein are subject to change without notice based on market conditions and other factors. These views and opinions should not be construed as a recommendation for any specific security or sector. This material is for your private information, and we are not soliciting any action based on it. The information in this report has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is neither representation nor warranty as to the accuracy of, nor liability for any decisions made based on such information. Past performance does not guarantee future performance. Investment Products are not insured by the FDIC or any federal government agency, are not deposits of or guaranteed by any bank, and may lose value.