Market Recap – November 2013
Sprint to the finish: As economic data delayed by the federal government shutdown began to trickle in and the Fed continued to hold off on tapering, investors continued to drive equities to record levels. The Dow industrials hit 12 new all-time closing highs during the month, which helped push the index above 16,000. The S&P 500 set its 38th new record of the year and made history by rising above 1,800 for the first time ever. While the Nasdaq is still well below its all-time record of 5048.62, set in March 2000, it did manage to surpass 4,000; the last time that happened, Al Gore and George Bush were a month away from their first presidential debate.
All the enthusiasm for equities continued to lure investors away from bonds as the benchmark 10-year Treasury yield rose and prices fell. The price of gold continued to slide, losing $100 an ounce to end the month at $1,250, while the spot price of oil fell to roughly $93 a barrel.
Economy in Review
The U.S. economy grew at an annual rate of 2.8% in the third quarter, according to the Bureau of Economic Analysis. The initial estimate, which is subject to two future revisions, represents an improvement from Q2's 2.5% and matches the pace hit a year earlier. This took place as the economy added 204,000 new jobs in October.
Counterbalancing positive retail spending and sales figures, U.S. manufacturing showed signs of slowing. After two straight months of increases, durable goods orders fell 2%, fueled in part by a nearly 16% drop in new orders for aircraft and parts.
Elsewhere, the Senate confirmed Federal Reserve vice chairman Janet Yellen to replace Ben Bernanke when the Fed chairman's term expires January 31. Yellen's confirmation testimony as well as minutes of the Fed's most recent monetary policy committee meeting showed little inclination to begin cutting bond purchases before 2014.
The Justice Department agreed to settle an antitrust suit and permit the $17 billion merger of American Airlines and US Airways, which will create the world's largest airline carrier. Also, JPMorgan Chase agreed to pay $13 billion--said to be the largest corporate/government settlement in U.S. history--to settle charges that its subsidiaries misrepresented mortgage-backed securities leading up to the 2008 financial crisis.
The Month Ahead
Washington will once again be a focus of investor attention. A report from the congressional budget conference committee established as part of the agreement ending October's government shutdown is due mid-month, and the Federal Reserve's monetary policy committee gets its last chance this year to reduce its bond purchases. Both of those factors could add to any volatility from year-end profit-taking and general portfolio tidying by institutional investors.
Source: Forefield Financial Communications.
Notes: The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighted index composed of 2000 U.S. small-cap common stocks. Market indexes listed are unmanaged and are not available for direct investment.
The performance quoted represents past performance, which does not guarantee future results.This summary represents the views of the portfolio manager as of November 30, 2013. Those views may change, and the Funds disclaim any obligation to advise investors of such changes. The Azzad Funds are self-distributed and available by prospectus only. A free copy of the prospectus, which contains information about the Funds’ risks, fees, and objectives, and other important information, is available at www.azzadfunds.com or by calling 888.350.3369.