The market has had a tremendous recovery this quarter as seen below. All major indices are up 9% or more except for utilities. With the recent strong jobs report, the odds of an interest rate hike in December have risen to about 70%. The expectation of the rate hike is the primary driver for the under performance of the interest rate sensitive utility industry.
November and December have been two of the best months for stocks over the last 65 years but, with the exceptional rally so far this quarter; it would not be a surprise to see some backing and filling short term. However, the volatility index has been below 20 since early October signaling an all clear for now.
Though the potential rate hike will likely create some short term uncertainty, we expect it to be good news for the market given some time. The economy is showing signs of some acceleration and we remain bullish intermediate to longer term.