Markets “In a Nutshell” for December 1, 2020
Investment Week at a Glance
Stocks finished up for the week. The Dow Jones Industrial Average was up 2.21%, the S&P 500 rose 2.27%, the New York Stock Exchange Composite (2,000 stocks) rose 2.69% and the average investors index (Value Line Index) was up 3.79%. Foreign stocks (DJ Global ex U.S.) were up 2.19%. Bond prices were lower for the week, with the 10-year U.S. Treasury ending the week 1 basis point higher at 0.84%. (Data source: Wall Street Journal)
Dow Reaches 30,000
Stocks rose broadly in the holiday shortened week and pushed the Dow Jones Industrial Average, one of the most widely followed indices of the U.S. stock market, over the perceptual milestone of 30,000. Vaccine hopes and positive economic news drove the market higher in an otherwise slow week for news, but continued the trend of what has been one of the best Novembers for stocks in recent history. Together, AstraZeneca and Oxford announced that they had come up with a third vaccine option that has produced positive results, while also being able to manufacture the vaccine at a lower price and transport much more efficiently than the Pfizer/BioNTech and Moderna vaccines. While questions surfaced later in the week about the test’s trials and the true effectiveness of the new vaccine, the news solidifies that the healthcare sector was likely able to pull off the incredible feat of developing a vaccine for a new virus in under a year. (Barron’s)
Broad Rally Spurs Hope
One of the main detractions from the recovery in stocks that began in late March and early April, was that the rally was being carried on the back of only a few large technology companies, like Apple, Amazon and Facebook. That has not been the case so far in the 4th Quarter, with the Russell 2000, an index for small-cap companies, outperforming the S&P 500, an index for the largest 500 companies in the U.S., by over 11%. An outperformance of that magnitude signals clear optimism in an economic recovery that will benefit the smaller companies in the country that depend more on consumer and business spending. Another positive figure came on November 9th, when over 71% stocks in the S&P 500 hit an all-time high on the same day, the third highest reading on that figure since 1990. All of these point to a much broader rally that benefits a much larger number of stocks and limits the fear of missing on the few stocks that carry the market going forward. (Barron’s)
The S&P 500 hit another record close last Friday as stocks rose. How many record closes does that make for the year?
Have a Great Week!
3. Last Friday marked the 26th record close for the S&P 500. (Wall Street Journal).