ND&S Weekly Commentary 11.23.20 – Markets Tempered by Virus Surge

November 23, 2020

U.S. equity markets dipped last week as investors weighed the realities around rising Covid-19 infections. In response, we saw more cities and states implement restrictions in an effort to slow the spread.
For this past week, the S&P 500 declined 0.73% while the DJIA gave back 0.65%. The tech-heavy NASDAQ ticked higher by 0.25%. Small company stocks, represented by the Russell 2000, bucked the trend as the index closed higher by 2.38% for the week. International equity markets also finished higher as the MSCI EAFE and emerging markets (MSCI EM) added on 1.88% and 1.77%, respectively. Bonds had a strong week as the Bloomberg/Barclays Aggregate finished the week up 0.59%. As a result, the 10 YR US Treasury closed at a yield of 0.83% (down 6 bps from the previous week’s closing yield of 0.89%). Gold prices closed at $1876/oz. – down 0.69% on the week. Oil (WTI) moved higher to close at $42.15 – up 5.03% on the week.

Economic news released last week was mixed. Retail sales advanced 0.3% in October, missing estimates of a 0.5% increase. Industrial production increased 1.1% in October, beating estimates of 1.0%. Existing home sales increased 4.3% in October and is now up a whopping 26.6% from the same time last year. Housing continues to be a bright spot for the economy as support from low rates continues. Lastly, weekly jobless claims were 742,000, missing estimates of 711,000. Despite the holiday-shortened week, there will be reports on Markit US manufacturing and services PMIs, personal income, durable goods orders, and consumer confidence. The Bureau of Economic Analysis will also report their update for 3Q2020 GDP on Wednesday.

Although we must navigate the market and economies response to rising case counts near-term, there is light at the end of the tunnel and multiple vaccines should be widely available by Spring/Summer 2021. We expect markets to continue to be choppy like this past week. We have witnessed a rotation in recent weeks with areas that previously lagged benefiting the most on the vaccine news. As always, investor focus should remain on long-term goals.

First and foremost, we hope that all of you and your families are staying healthy and safe during this recent spike in cases. Although this year will feel a little different due to COVID-19, we wish to extend to all a very Happy Thanksgiving!

“An attitude of gratitude brings great things.” – Yogi Hhajan