Wall Street ended November ahead of where it began the month adding to October’s strong rally off the Sept. 30 lows.  The Dow Jones Industrials (1), S&P 500 (2), and NASDAQ (3) indexes performances converged for the month, all posting gains within the range of 5.25% – 6%. Stocks have been rallying since October and the holiday season tends to be strong for equities heading into the final month of the year.

In last month’s commentary, we made a case for peak hawkishness and peak inflation as likely being behind us. That narrative caught support throughout November as consumer and producer inflation readings softened. Though hesitant to embrace the notion the economy has turned the corner on inflation, the Federal Reserve’s actions gave investors reason to be optimistic for a year-end rally rather than a lump of coal in their stocking.

The more hawkish (and louder) voices of the Fed committee sounded as if their glass is half empty asserting more work must be done to tame inflation before pausing rate increases; however, the minutes from the last Federal Reserve meeting reinforced expectations that interest-rate hikes may be scaled back beginning in December. Expect the Fed to fixate on tight labor markets and be slow to acknowledge signs of slowing inflation. Jawboning is one of their most important tools to manage inflation expectations.

The last week of November brought important, market-moving Fed speak and economic data. The Bureau of Economic Analysis released its second estimate of third-quarter gross domestic product, revising it from 2.6% to 2.9%. Later the same day, at an address to the Brookings Institution, Federal Reserve Chair Jerome Powell made market-moving news saying that smaller interest rate increases are likely ahead though he is not satisfied with the present progress made to slow inflation. His words, though delivered very cautiously, cheered Wall Street. The Dow (1) rose 737 points, or 2.18%, and the tech-heavy Nasdaq Composite (3) soared 4.41% higher.

Another important report, released Dec. 1st, includes the latest data on personal income and outlays, which contains the “Personal Consumption Expenditures Price Index”, a measure of inflation preferred by the Federal Reserve. The core “Personal Consumption Expenditures Price Index”, a gauge that excludes food and energy, rose 0.2% for the month and was up 5% from a year ago. The ISM Manufacturing Index at 49%, reported an anemic level of business expansion for the period, 1.2% lower than October and the lowest reading since May 2020,

To summarize, economic readings are softening, and though the labor markets are showing signs of loosening, the data is mixed and the Fed will err on the side of interpreting that as still tight. For the Fed to pause their tightening, it will probably take a much more convincing sign of a slowing labor market.

The other big headline in November was that the name Sam Bankman-Fried (SBF) entered the financial scandal hall of shame when the crypto firm he founded, FTX, entered bankruptcy. Though it will take some time to completely assess the financial damage, a lawsuit has been filed alleging investors lost $11 billion. An interesting aspect of the lawsuit is that it extends to several celebrities that promoted FTX. It is a story of gross negligence and fraud, commingling investor funds with operating capital, inadequate regulation and oversight. I had seen interviews of SBF and frankly could not understand how anyone could entrust him with funds. It was too easy and bizarre. This bankruptcy and others that litter the crypto landscape will cast a pall over cryptocurrencies for some time. I have never been a supporter of cryptocurrencies. Conceptually I can understand it, but in reality, I could not understand the value or valuations. Caveat emptor!

As the year winds to a close, now is the time to look toward year-end tax planning. We are here to assist you, and the checklist below is provided to prompt you about specific topics you may want to address before the end of the year.

Year-end Tax Planning Checklist:

  • Make Contributions to Retirement Accounts
  • Make Charitable Contributions
  • Does it Makes Sense to “Stack” Deductible Items in Alternating Tax Years?
  • Make Annual Gifts to Family Members
  • Check Paycheck Tax Withholding Rates
  • Evaluate Capital Gains and Losses; Realized and Unrealized
  • Review your Estate Plan

You may consider revisiting your financial plan and re-centering on personal goals. You should not assume that a short-term drawdown of your financial accounts necessarily shipwrecks your plan.  Taking a long-term view of your unique circumstance is the best way to assess the impact and consider corrective actions.

This could be a very good time to max out your retirement plan contributions. Historically, lower stock prices mean lower stock valuations and higher future returns on your investment. So, this may be an opportune time to invest cash on hand that you can commit to long-term investments.

If your investment values or taxable income is down, you should consider a Roth conversion of some or all your traditional IRA accounts.1 Converting long-term investments that have drawn down in value reduces the current tax due and can magnify the future amount of capital in a Roth IRA with tax-free distributions.

We will continue to look for opportunities to harvest capital losses in preparation for the upcoming tax season and reposition your portfolio considering the changing investment landscape.

We advocate focusing on what we can control. Specifically, we will remain committed to investment strategies that are first informed by our client’s financial plans and unique investment profiles, as well as portfolios that are well-diversified, cost-effective, and tax conscious.

Your November portfolio reports have been deposited in your eMoney vault. If you are interested in discussing them or the year-end tax planning opportunities that best align with your goals and objectives, we are conducting reviews and would love to discuss those with you. You can call us or schedule a review here.

We look forward to connecting soon! Happy holidays!


1. Dow – The Dow Jones Industrial Average (DJIA) is an unmanaged group of securities considered to be representative of the stock market in general.

2. S&P 500 Index – The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

3. NASDAQ – The NASDAQ) is an unmanaged group of securities considered to be representative of the stock market in general.

This material contains an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor with regard to your individual situation. Comments concerning the past performance are not intended to be forward-looking and should not be viewed as an indication of future results.

Tim Waterworth

More about the author: Tim Waterworth

Tim is licensed as a Registered Representative with Kestra Investment Services, LLC, and an Investment Advisor Representative with Kestra Advisory Services, LLC. He holds himself to a fiduciary standard, which means he is obligated to put the best interests of his clients first.