Just a few market notes as we begin the month of December. The potential Federal Reserve interest rate hike is the story to watch this month (the committee meets on the 15th and 16th). Most “experts” believe the market has already priced in what would be the first rate hike in nine years (the longest modern stretch without a rate hike) and any movement by the Fed will be taken as a sigh of relief by investors. Most seem to feel this vail of uncertainty has been hanging over the markets all year and the removal of such could be a reasonable point in favor of a potential December rally. The January futures market is currently projecting around a 75% chance of a Dec. interest rate hike. That said, there are a few other interesting facts that make Dec. fairly compelling from an investment perspective (data since 1928):
- On average, December is the second best performing month of the year (July is the best)
- December has positive performance 74% of the time
- December averages a 1.4% return (3% in up months and -2.9% in down months)
- December is the only month never to have posted the worst performance of the year
With the Fed’s meeting coming up, it should be an interesting month to watch the market to see if the averages play out… or not.
This article is meant to be an analysis of current market trends and not to be construed as investment advice by Russell Capital Management.
Ford N. Lankford is a Portfolio Manager at Russell Capital Management (RCM). He manages investment portfolios and consults on investment planning for personal and institutional clients, as well as retirement plan sponsors and participants.