Heading into the final trading month of the year, the U.S. stock market has history riding on its side.
The Dow Jones Industrial Average (NYSEARCA:DIA), the S&P 500 (NYSEARCA:SPY), and the Nasdaq Composite (NasdaqGM:ONEQ) have all posted average of gains between +2.3% to 5.1% during the fourth quarter of pre-election years in the past 66 years. And while it’s still too early to tell if stocks will repeat this overwhelming bullish historical trend, the recent performance of stocks during the final part of the year is likewise positive.
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Since 2003, the S&P 500 (SNP:^GSPC) has enjoyed a median gain of +2.78% during the final 30-days of trading. (See table below)
The U.S. economy added 211,000 net new jobs in November and the consensus view is the Federal Reserve will increase short-term interest rates at it’s next meeting on Dec. 15-16.
Whatever the Fed does, there’s likely to be a strong reaction from stocks just as their was a strong reaction from the European Central Bank’s decision this past Thursday to extend it’s government bond purchasing program through March 2017. Around the globe, stocks immediately fell sharply at the ECB’s latest plan – a reaction the market wasn’t impressed.
Since the start the year, the total U.S. stock market (NYSEARCA:VTI), which includes large, mid, and small companies, has gained +2.73% and is outperforming other major asset classes like emerging markets (NYSEARCA:VWO), gold (NYSEARCA:GLD), and bonds (NYSEARCA:BND).