Markets “In a Nutshell” for November 29, 2021
Investment Week at a Glance
Stocks finished lower for the week. The Dow Jones Industrial Average fell 2.00%, the S&P 500 was down 2.20%, and the NASDAQ fell 3.50%. Foreign stocks (MSCI EAFE) were also down, falling 2.10%. Bond prices were higher for the week, with the 10-year U.S. Treasury yield ending the week at 1.49%. (Data source: Wall Street Journal)
Market Worry on New COVID Strain
The market had looked to be calm to begin Thanksgiving week but the news of a new Covid strain in South Africa caused the largest daily decline for the Dow in over a year on Friday. The new variant, Omicron, was said to be more transmissible than previous strains of Covid and many nations are once again restricting international travel, this time from South African nations. In spite of limited information on the new variant, the market reacted sharply to the downside. Over the weekend we learned that cases of this variant have been mild and not as deadly as previous strains, and markets opened Monday with a modest rebound. Market volatility is expected to continue until we know more about how this strain could affect the economies around the world.
Historically markets have been very strong after Thanksgiving as we head toward the end of the year. Since 1950 the S&P 500 has been up 1.5% on average and we have seen a positive return 80% of the time. When we see a positive return after Thanksgiving, the market next year is also up 75% of the time. The biggest threat to the market performing as it historically does in this time period is the new Covid strain, as some worry lockdowns may come back into effect. However, if the new strain proves to be less serious than people first believed, the market may be able to end the year strong leading into 2022. As news about the new variant becomes available, the market is expecting some volatility as shown in the Volatility Index (VIX) which spiked up 50% on Friday.
What is the single largest daily point drop for the Dow Jones in history? (Scroll Down for Answer)
Have a Great Week!
4) 2997. On March 16, 2020 the Dow Jones fell 2997 points.