Dow closes a strong November rally, rises to a new high for 2023

The Dow Jones Industrial Average has celebrated its best month since October 2022 on Thursday, when gain has hit a new high for the year thanks to Salesforce’s earnings and declining inflation data.

The Dow of 30 stocks rose 291 points, or almost 0.8%, above its previous peak set in August. The Nasdaq Composite dropped 0.7% and the S&P 500 dropped 0.1% as investors cashed in on the Big Tech stocks that drove the November rally.

With an 8% gain at the end of November, the Dow has snapped a three-month losing streak. In November, the Nasdaq has gained about 10%, and the S&P 500 has also increased by more than 8%. As of July 2022, both averages are on track to have their best monthly performance.

If the current favourable conditions hold through to the end of the year, the market should continue to drift higher. 2022 was a period of uncertainty, but 2023 is a tale of many things going well.

Salesforce, a cloud software provider, outperformed expectations in terms of revenue and earnings for the third quarter of its fiscal year, which helped it top the Dow by over 6.5%. The good news came from Salesforce’s cloud data division, whose revenue rose by 22% over the prior year thanks to the company’s artificial intelligence product, Einstein GPT.

The Federal Reserve’s preferred inflation indicator, the personal consumption expenditures price index, increased 0.2% in October and 3.5% year over year, according to data released early on Thursday. These gains were consistent with expectations.

As the data on slowing inflation emerged this month, the yield on the 10-year Treasury fell, which improved investor mood towards stocks. By far the largest gainers in November were technology shares, but as the month drew to an end, investors were pulling some of those bets. Nvidia is still up 14.5% for the month despite losing more than 2.9% on Thursday. After a near-20% recovery in November, Tesla’s stock fell 1.4%.

According to the Atlanta Fed tracker, GDP growth was 1.8% in Q4, indicating a significant slowdown in the US economy—not a contraction. GDPNow has recently proven to be a reliable indicator of the direction the economy is taking. The gauge has primarily processed data from October, the first month of the quarter.