ND&S Weekly Commentary 11.30.20 – More Stimulus Please

November 30, 2020

The Thanksgiving holiday-shortened week gave investors and traders a lot to be thankful for. The US and global markets all performed very well for the week and the month of November. The Dow Jones Industrial Average (DJIA) crossed the 30,000 mark for the first time, with its best monthly return since January 1987. Both the DJIA and the S&P 500 realized their best November returns since 1928.

Investors have been challenged by the positive vaccine news and the escalating COVID-19 cases and hospitalizations. The election turmoil has also brought with it uncertainties and anxieties over political control and economic strategies going forward.

For the week, the DJIA returned 2.25%, the S&P 500 was up 2.3% and the tech-heavy Nasdaq, which had been under pressure, rebounded 2.97%. Foreign stocks also felt relief with Developed and Emerging markets gaining 2.24% and 1.79%, respectively. The slew of positive vaccine news and encouraging economic prospects lifted cyclical companies which are the most economically sensitive. In November, materials, financials, and industrials have rallied 13% while energy surged nearly 34%. In the last month there have been the highest inflows into global equity funds since January 2018. The growth versus value investment debate is back in the forefront. There’s been a rotation from growth to value as investors look for stocks with upside when the pandemic ends.

The coronavirus infection and hospitalization rates continue to surge with 266,000 people dying with the virus in the US. More lockdowns and delays on additional stimulus and fiscal spending will undoubtedly put pressure on equity prices. New unemployment claims are worse than any time prior to the pandemic hitting the 1.1 million mark last week. The health of our economy and financial markets depends on a new round of economic stimulus and a successful rollout of the COVID-19 vaccines. Interest rates remained virtually unchanged for the week with the yield of the 10 year US Treasury ending at 0.84%. The price of US crude soared 7% to $45.38 per barrel benefiting from the improved outlook for demand.

We expect markets to be choppy with tax loss harvesting and momentum stock profit taking to hinge on investors and traders reacting to COVID and stimulus news. Please remain diversified and stay in-line with your long term investment goals. There will be more important economic news this week with Federal Reserve comments and reports on pending home sales and the unemployment rate.

Stay safe!

“Appreciation is a wonderful thing. It makes what is excellent in others belong to us as well.” – Voltaire