After a bumpy month, stocks close up.

The market volatility that kicked up in October continued through November — but this time, most major categories of stocks ended in positive territory for the month. Read more to find out what happened and what it may mean for you.


What happened.

November was another turbulent month for the stock markets. The S&P 500, an index of large-cap U.S. stocks, moved up or down by more than 1% on eight of the month’s 21 trading days. Markets around the world saw similar gyrations. But after all the volatility, most major categories of stocks ended the month up.

The top-performing categories in November were emerging-market international stocks, up +4.12% (MSCI Emerging Markets Index), and domestic large-cap stocks, up + 2.04% (S&P 500). The laggard was international developed-market stocks, which closed the month down 0.13% (MSCI EAFE Index). Bonds were up +0.60% (Bloomberg Barclays Aggregate Index).

Why it happened.

The month’s financial headlines were dominated by the Federal Reserve’s stance on future interest-rate increases and the direction of U.S./China trade policy. When news headlines suggested progress was being made in trade talks, stocks rose; when it appeared tensions had increased, stocks fell.

As for interest rates, the Fed indicated in early November the likeliness of continued hikes. Because this stance was expected, it garnered little market reaction. Later in the month, when Fed Chair Jerome Powell shifted to say that interest rates are just below “neutral” — suggesting they may not increase very much after all — markets reacted positively.

Why the response this time? Because markets tend to react to new information, not to what’s already known or anticipated. November was a good illustration of this: The month’s volume of news about topics important to the economy prompted markets to move up and down frequently.

Against the backdrop of market volatility, the U.S. economy continues to perform solidly. Growth remains strong at 3.5% per year; the unemployment rate is still low at 3.7% (although new unemployment claims increased slightly late in the month); and U.S. retail sales growth beat expectations as consumers bought more electronics and appliances.

What this means for you.

In November, your portfolio will probably have seen an increase in value — the more of your portfolio that’s invested in stocks versus bonds, the greater that return may have been. This would be the case if you’re further from retirement or you’ve told us you have a higher risk tolerance.

In this month’s sidebar, we look at how taking advantage of the low fund expenses in many workplace retirement plans can help returns over time. At Financial Engines, we select from among the investment options your employer provides to build you as cost-effective a portfolio as we can while tailoring it to your circumstances. To do this, it’s important that we know as much as possible about your personal situation and risk preferences. Please let us know of any changes by logging into your Financial Engines account or calling one of our advisors.


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