November was a great month for U.S. markets, with the S&P 500 up by 3.63 percent, the Dow up by 4.11 percent, and the Nasdaq up by 4.64 percent. All three indices are now up by more than 20 percent for the year. As we celebrated Thanksgiving, we had a lot to be thankful for. The news abroad wasn’t as good. But it also wasn’t as bad as the headlines might have suggested, as developed markets were up by 1.13 percent and emerging markets were down by just 0.13 percent. Given the headlines, those results are also pretty good.

A Look Back

Risks moderate. The reason for the strong performance was that a number of risks weighing on the markets—and showing up in the headlines—moderated during the month. For the U.S. economy, concerns about slowing growth were offset by better-than-expected data. Job growth at the start of the month came in much stronger than expected, at 128,000 new jobs versus the 85,000 expected. This result came despite the strike at General Motors, which subtracted about 50,000 jobs. Consumer confidence also stabilized, after declines in previous months. Finally, the Fed reduced rates during November, signaling that the policy environment would remain supportive.

Faster growth. There were also signs that these positive trends were translating into faster growth. Housing continued to be strong: sales of existing homes were up for the fourth month in a row on a year-to-year basis, while new home sales were at the highest level since 2007. Consumer spending has also been growing, for eight months in a row now. Finally, economic growth for the third quarter came in at 2.1 percent, which was up from the second quarter. In other words, for all the worries and headlines, the economy did quite well.

Good news for markets. Markets responded to that good news for the economy and had good news of their own during the month. Earnings were down by 1.3 percent, year-on-year, which doesn’t sound like good news. But it is as compared with the expected decline of 3.6 percent. Combined with rising expectations for the future on better economic data, earnings were a key driver in the gains.

At the start of the month, worries included the Fed (would it raise rates?), the trade war (would it get worse?), job growth (would it drop further?), and, of course, impeachment (would it rattle markets?). At month-end, most of those worries had subsided. All in all, a good month.

A Look Ahead

Risks remain. Looking ahead to December, the news is more mixed. We saw some volatility at the start of the month, on renewed worries about the trade war. Plus, there are signs that confidence—especially for businesses—has stopped rebounding. The impeachment process also continues to be a risk. Just as at the start of November, the headlines are ominous. The biggest thing to watch this month, to determine whether those risks are real, will be the jobs report this Friday. An earlier report on job growth came in much weaker than expected this week, so there is a real possibility that job growth could move back to a real worry. The other thing to watch will be the political headlines, especially around the prospect of a trade deal. These headlines have moved markets in the past and might shake confidence even more.

Santa Claus rally possible. Should the jobs report come in reasonably healthy, though, and the trade negotiations keep moving forward, December will also likely be a better month than the headlines at the start of the month suggested. December is historically a strong month for markets, and a Santa Claus rally remains possible, despite the volatility at the start of the month. Just as with November, while there are real risks, the base case remains positive. Watch the actual data, not the headlines, to see if Santa is on the way.

Brad McMillan is the chief investment officer at Commonwealth Financial Network.