When it comes to equity market performance in a given month, it doesn’t get much better than November.  While the S&P 500’s total return of 10.95% in the month was only the second-best monthly performance of the year, it was still enough to rank as the third-best month for the S&P 500 in the last thirty years and just the ninth month since 1980 that it was up 10%+.

The chart below shows the S&P 500’s annualized total return over the last one, two, five, ten, and twenty years and compares the current returns to the historical average.  For the last year, the S&P 500’s total return has been 17.5% which is nearly six full percentage points higher than the historical average.  For the last two years, the annualized return has been nearly as strong at 16.8%, and it is actually even stronger relative to the historical average of 10.5%.  Moving further out the time horizon, the S&P 500’s annualized returns drift lower, and while the five and ten-year annualized returns are greater than average, the S&P 500’s annualized gain of 7.3% in the last 20 years is more than 3.5 percentage points below the historical average of 10.9%.

The last couple of years haven’t just been strong for equities. Over the last year, long-term US Treasuries, as measured by the Merrill Lynch 10+ Year US Treasury Index, have rallied 15.7%, which is more than six full percentage points greater than the historical average of 9.5%.  Over the last two years, returns have been even stronger with an annualized gain of nearly 20%, or more than double the historical average of 9.1%!  While the last two years have been strong for US Treasuries, the last five, ten, and twenty years have all seen returns of between one and two percentage points below their historical average.

Lately, when you see rallies in the equity market, it tends to be accompanied by a decline in treasuries as yields rise.  In November, though, that wasn’t the case.  Even with the S&P 500 up 10.95%, long-term US Treasuries rallied just over 1%. So how uncommon is it for stocks to rally like they did in November while bonds also rally.  Actually, it is not very uncommon at all.  The table below shows the nine months since 1980 where the S&P 500’s total return in a given month was 10% or more, and of those months, long-term treasuies also rallied in every month but one (October 2011).  Click here to view Bespoke’s premium membership options for our best research available.

The fifth and final regional Fed index for November came out of the Lone Star State today. The index was expected to show expansionary, but decelerating activity in the month of November. The results were just that as the headline number fell from 19.8 in October down to 12 which was a bit weaker than the expected decline to 14.3. Although a slower rate of growth, activity has continued to expand and the index still at some of the highest levels of the past two years.

Similar to the other manufacturing reports from the other districts released this month, under the hood things were pretty mixed.  All but one index (Finished Good Inventories) has continued to be consistent with further growth, but more than half of those indices declined this month, That means activity has generally continued to expand, but at a slower pace than last month. For some components like New Orders and Production, the deceleration was significant while employment metrics held up better.

In November, New Orders continued to grow as the index remained positive at 7.2. While that is still indicative of overall growth in new orders, it also marks a significant deceleration from October when the reading was 19.9.  Given this, the index for New Orders Growth Rate likewise fell to 9.7 from 14.3.

The indices for Capacity Utilization and Production saw even more dramatic declines.  The month over month declines for both indices were in the respective bottom 2.5% of all monthly changes. With Capacity Utilization at 6.9 and Production at 7.2, this month’s readings were still indicative of the district’s firms increasing output for six months in a row.

Even though production overall has continued to pick up, inventories continue to decline at a rapid pace.  The index for Finished Good Inventories fell sharply this month, dropping from -1.9 to -14.7.  Outside of August’s low of -17.3, that is the lowest level since January of 2010.

As inventories drawdown at one of the most rapid paces of the past decade, lead times have risen.  The index for Delivery Time bounced back in November after a decline in October.  At 12.2, the index is now at the highest level since the summer of 2018. That is also nearly in the top 5% of all readings in the survey’s history. Click here to view Bespoke’s premium membership options for our best research available.

We’ve become conditioned over the last couple of years to look to the mega-cap stocks of Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), Alphabet (GOOGL), and Facebook (FB) to not only top the list of largest stocks, but also the best performers.  The month of November has been a different story, though.  Through Friday, the S&P 500 was up an impressive 11.3% on the month, but the equal-weight index (which weights each stock the same) was up a much more impressive 15.4%. Going back to 1990, this November’s performance of the S&P 500 Equal-Weight Index ranks as the second-best of the last thirty years only trailing the 18.6% gain in April 2009.

In addition to being one of the best months for the S&P 500 Equal Weight Index in terms of absolute performance, this month is also on pace to be one of the best months for the index relative to the market-cap weighted index as well.  At the current level of 4.13 percentage points (chart below), this November will be the best performance for the Equal Weight Index relative to the Market Cap Weighted index since April 2009.  Besides April 2009, which was just after the lows of the Financial Crisis, the only other months where the performance gap was wider were in five months spanning April 1999 through May 2003.

In terms of top-performing S&P 500 stocks this month, there have been a lot of winners.  In the entire index, only 40 stocks are down month to date, and only nine of those are down more than 5%.  The table below lists the 27 stocks in the S&P 500 that have rallied more than 40% so far this month.  The top six stocks listed, as well as a number of others, come from the Energy sectors.  Besides beaten-down stocks from the Energy sector, most of the stocks listed come from other sectors, like cruises, air travel, and lodging that have been battered by the pandemic. Five stocks you won’t find on the list, though, are the FAAMG stocks mentioned above.  While all five stocks are in the black for the month, none of them are even up 10%.  Slackers.

One last observation is that even after gaining at least 40% in November, 25 of the 27 stocks listed below are all still down YTD, and most of them by a lot.  The only two stocks that are now positive YTD are Albermarle (ALB) and DISH Network (DISH).  Even after taking into account this month’s gains, the average YTD change of the 27 stocks listed is a decline of 32.1%.  Click here to view Bespoke’s premium membership options for our best research available.