Key Points

• Broader U.S. equity markets soared to new highs following a “Red Sweep” in the U.S. elections on November 5^th as the prospect of business supportive fiscal policies and deregulation loom under a second Trump administration.
• Performance was elevated across all Nasdaq Index suites in November with 83% of indexes tracked by this report finishing the month in positive territory, resulting in an average return of 6.8%.
• Markets now shift their focus to December U.S. macro data ahead of the December 18^th Federal Reserve meeting as expectations for another 25bp rate cut are at over 70%.  

Chart of the Month
 

Source: Nasdaq Index Research as of November 30, 2024.

Executive Summary

The Nasdaq-100® (NDX®) reached new highs in the aftermath of the U.S. election on November 5^th following the “Red Sweep” as Republicans captured the Presidency and both chambers of Congress. The prospect of Republicans being able to push through a lower corporate tax rate, extend the expiring 2017 tax cuts, and enact deregulation policies, were all seen as tailwinds for U.S. corporate profits going forward—spurring equities to their most recent leg higher. This environment has unfolded amidst a still solid U.S. economic backdrop and easing financial conditions with the Federal Reserve having cut rates by 75bps since September 2024. Additionally, Q3 earnings are on track to finish solidly with 76% of the Nasdaq US 500 Large Cap™ Index’s reported companies beating earnings estimates and 63% beating sales estimates. Consequently, both the top-down and bottoms-up tailwinds helped propel the Nasdaq suite of indexes to an average gain of 6.8% CoreCard in November, while NDX advanced by 5.2%. NDX is now higher by 24.4% YTD.

With another strong year for NDX winding down (higher by ~54% in 2023), the markets will continue to digest the implications of the U.S. elections as well as the final Federal Reserve rate decision of 2024 and its latest Summary of Economic Projections (SEP) on December 18^th. While the prevailing narrative is that corporate earnings will continue to grow into what have been elevated equity valuations (e.g., U.S. large caps have a forward P/E of ~22x), the aforementioned fiscal policies also portend for a stickier inflationary backdrop. And, coupled with the solid U.S. economic landscape, this has factored into the market pricing of Federal Reserve rate trajectory as the number of cuts projected in 2025 have fallen from four in June to between two and three by the end of November. As discussed last month, financial markets also quickly moved to price in this scenario, in addition to the scope for a wider U.S. fiscal deficit, with Treasury 10-year yields surpassing 4.40% by mid-November, before falling to around 4.20% by early December.  This rise in yields has also been reflected in equities as cyclicals have generally outperformed defensive sectors by since mid-September when Treasury 10-year yields bottomed at 17-month lows. 2024 was a notable year from a macro perspective given 1) the important election cycles not only in the U.S. but globally as well and 2) the beginning of rate cutting cycles by major global central banks. Appreciating that major geopolitical and trade risks remain, equity markets will likely pivot to debating and focusing on potential changes in leadership in 2025—whether on a sector, style, and/or thematic basis.

Nasdaq Indexes November 2024 Performance Recap

Among the 118 indexes tracked in this report, 98 finished November in positive territory, while just 20 ended with negative returns. The best-performing index was Nasdaq Crypto™ (NCIS™), delivering a return of 44.9%, driven by record monthly flows into Bitcoin ETFs and optimism surrounding the perceived benefits a second Trump administration may have on the broader cryptocurrency space. The average return across all 118 indexes for the month was 6.8%.

Nasdaq Featured Indexes

Each of the nine Nasdaq Featured Indexes registered positive returns in November, a reversal from October when eight of nine indexes finished lower. The midcap Nasdaq Q-50 Index® (NXTQ™) recorded a surge of 12.6% while the Nasdaq-100^® (NDX^®) gained 5.2%, the lowest return of the entire group in November. Overall, the group was up an average of 7.5%, driven by strength in Nasdaq-listed small caps and midcaps.

Nasdaq Global Indexes

Nasdaq Global Indexes were mixed for the month as five indexes ended the period higher while the remaining four declined, with an average return of 3.0%. The Nasdaq US Small Cap™ (NQUSS™) and the Nasdaq US Mid Cap™ (NQUSM™) were the best performers, registering returns of 11.1% and 9.1%, respectively. The group's laggard was the Nasdaq Emerging Markets™ (NQEM™), which fell by 3.3% as the U.S. dollar rose to a two-year high relative to a basket of other major currencies, fueled further by the policy implications of the Red Sweep. Performance discrepancies in the Global Indexes suite suggest equity indexes with sizeable exposure to domestic markets responded more positively to the prospect of a second Trump presidency than international benchmarks.

Nasdaq Thematic Tech Indexes

Apart from two indexes with marginal losses, the remaining 23 indexes in the Nasdaq Thematic Tech Index suite generated positive returns. The indexes rose 8.2% on average as a group. The BVP Nasdaq Emerging Cloud™ (EMCLOUD™) was the top performer, registering gains of 19.0%; another notable outperformer was the KBW Nasdaq Financial Technology™ (KFTX™) Index, which gained 18.4%. Meanwhile, the PHLX Semiconductor™ (SOX™) and the Nasdaq Biotechnology™ (NBI®) finished the month with the weakest returns of –0.4% and –0.1%, respectively. Nvidia was up 4.1% for the month, though it saw a modestly negative reaction to its latest earnings report despite beating estimates from the Street. AMD, Broadcom, and Monolithic Power Systems were the biggest drags on SOX, due to a combination of weak earnings reports and negative geopolitical headlines impacting the sector, such as the U.S. ordering Taiwan Semiconductor to effectively pause the sale of its products to Chinese consumers, citing national security concerns with the CCP.

Nasdaq Volatility & Risk Control

All 13 indexes in the Nasdaq Volatility and Risk Control suite were positive in November, with an average gain of 3.3%. Driven by strong Nasdaq-100 performance, the returns ranged from a low of 0.8% with the Nasdaq-100 Volatility Control 5%™ Index (XNDX5E™), to as high as 12.4% for the Nasdaq-100 Risk Control 40™ (NXQR40™) Index.

Nasdaq Thematic Renewables and Energy Transition Materials Indexes

Overall performance across the Nasdaq Thematic Renewables and Energy Transition Materials lineup was mixed in November, averaging a monthly return of 0.5%. Seven indexes ended the month higher while the remaining six declined. The Nasdaq Clean Edge Green Energy™ (CELS™) posted the strongest return of the group with a 6.9% gain, driven by a 38% rally in its largest constituent, Tesla. The Nasdaq Sprott Nickel Miners™ (NSNIKL™) was the laggard of the group with a loss of 6.2%.

Nasdaq Dorsey Wright Indexes

Nasdaq Dorsey Wright Indexes continued to exhibit the upward trend observed in other suites, with an average return of 8.3%. All but two indexes finished in positive territory in November. The Dorsey Wright Technology Tech Leaders™ (DWTY™) rose a category-high 18.6%, whereas the Dorsey Wright Emerging Markets Tech Leaders™ (DWAEM™) slid 1.9%. A stunning 99% earnings-driven surge in AppLovin Corp, by far the largest holding of DWTY at 14.0%, helped propel the index higher in November.

Nasdaq Dividend and Income Indexes

The Dividend and Income suite delivered an average return of 4.1% for the month. The Nasdaq US Small Mid Cap Rising Dividend Achievers™ (NQDVSMR™) climbed 10.6% to lead the pack while the Nasdaq Emerging Markets High Equity Income™ (NQEMHEI™) retreated 4.1%. As noted elsewhere, domestic benchmarks within this suite outperformed their international peers following the outcome of U.S. elections.

Nasdaq Multifactor Indexes

All eleven indexes in the Multifactor suite posted gains this month, with an average rise of 7.5%. For the second month in a row, the best-performing index of the group was the Nasdaq AlphaDEX Large Cap Growth™ (NQDXLCG™), adding 11.0%. In comparison, the Nasdaq Victory US Large Cap High Dividend 100 Long/Cash Volatility Weighted™ (NQVWLDC™) and Nasdaq Victory US 100 Large High Div Vol Wt™ (NQVWLD™) both turned in monthly returns of 4.6%, the lowest of the Multifactor suite.
Nasdaq Sector-Specific Indexes

On average, the Nasdaq Sector-Specific class of indexes was up 6.3%, courtesy of the surge in banking benchmarks following the 2024 Presidential Election. The KBW Regional Banking™ (KRX™) was the best performer, registering a gain of 14.4%  while the PHLX Gold/Silver Sector™ (XAU™) registered a loss of 6.7%, the only index in the  suite to decline. It is likely the incoming administration will overhaul existing regulatory agency leadership including the Securities and Exchange Commission and the Federal Trade Commission. Current SEC Chair, Gary Gensler, an outspoken cryptocurrencies critic, announced he would resign from the SEC on January 20^th. Furthermore, Lina Khan, the current head of the FTC, is unlikely to remain at will probably depart her post under a second Trump administration that is likely to be more friendly to mergers and acquisitions, regardless of anti-trust considerations. A shift away from stricter regulatory oversight favors financials and banking more broadly in the coming years. 

Nasdaq Options and Other Quantitative Indexes

The average return across the suite of indexes was 1.9%, 80 basis points higher than the month prior. The Nasdaq-100 Quarterly Protective Put 90™ (NQTRI™), October’s worst performer, gained 4.5% in November, the highest within the category. The Credit Suisse Nasdaq Silver FLOWS106 TR™ (QSLVOTR™) saw the steepest decline of the suite, recording losses of 4.0% for November.

Nasdaq Crypto Indexes

November proved to be a strong month for the Nasdaq Crypto Index suite as the category generated an average return of 41.4%, by far the highest of any index suite this month. The Nasdaq Crypto™ (NCIS™) led the way with a 44.9% return while the three remaining indexes remained close behind. The Nasdaq Ethereum™ (NQETHS™), Nasdaq Crypto US Settlement Price™ (NCIUSS™), and Nasdaq Bitcoin™ (NCBCTS™) gained 42.9%, 39.4%, and 38.7%, respectively.

After eclipsing $70,000 in late October as investors positioned for a possible win by former President Trump – who has embraced crypto as part of his agenda – Bitcoin proceeded to rally over 41% following election day through the end of November, approaching the $100,000 level. ETF inflows reflected the surge in the digital asset. The Blackrock iShares Bitcoin ETF (IBIT) reached the $34 billion milestone, overtaking the iShares Gold Trust (IAU) in total assets just three days following the election. Additionally, the $31.8 billion of inflows to the iShares Bitcoin ETF (IBIT) this year ranks third among all ETPs, trailing only the Vanguard S&P 500 ETF (VOO) and the iShares Core S&P 500 ETF (IVV) with YTD inflows of $105.2 and $63.0 billion, respectively. 

Disclaimer:

Nasdaq® is a registered trademark of Nasdaq, Inc. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Neither Nasdaq, Inc. nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding Nasdaq-listed companies or Nasdaq proprietary indexes are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. ADVICE FROM A SECURITIES PROFESSIONAL IS STRONGLY ADVISED.

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