ND&S Weekly Commentary (11.9.20) – Markets Rebound

November 9, 2020

Equity markets rebounded last week on generally good economic news and election results that indicate neither Democrats nor Republicans received a broad mandate. Divided governments are widely thought to be good for the stock market. Also this morning, U.S. equity markets are up strongly on the announcement by Pfizer and BioNTech that their Covid-19 vaccine candidate is more than 90% effective in latest trials.

The S&P 500, DJIA, and NASDAQ were up 7.4%, 6.9% and 9.1 %, respectively. The best performing sectors for the week were technology, healthcare, and materials. The worst performing sector continued to be energy. International equities also advanced with MSCI EAFE up 8.1% and emerging markets (MSCI EM) higher by 6.6%. Bond prices rose last week with the rate on the 10 year U.S. Treasury dropping from 0.88% to 0.83%.

In economic news last week, Friday’s jobs report showed that hiring picked up last month at a faster pace than expected with an increase of 683,000. As a result, the unemployment rate dropped to 6.9%, beating estimates of 7.7%. The Institute of Supply Management (ISM) reported their purchasing manager’s index (PMI) for manufacturing at 59.3%, much better than estimates of 55.8%. The Non-Manfacturing Index which tracks the services sector fell to 56.6% missing estimates of 57.5%. The Federal Open Market Committee met last week leaving their policy unchanged. Chairman Jerome Powell mentioned the need for “further (economic) support” to help fight the effects from the Covid-19 virus.

As mentioned above, markets are reacting positively this morning on Covid-19 vaccine news with the strongest action on names hit hardest by the pandemic. We continue to recommend that investors maintain a fully diversified portfolio consistent with their long-term objectives and risk tolerance.

“It always seems impossible until it’s done.” – Nelson Mandela