ND&S Weekly Commentary 12.7.20 – Hoping For Good News

December 7, 2020

The monthly jobs report released on Friday was much weaker than expected as the data showed that 245,000 jobs were added, missing estimates of 440,000 new jobs. The report was the fifth straight month of slowing gains which showed the job market is losing steam. The worsening pandemic will likely result in more restrictions and job losses which will continue to put pressure on the U.S. economy in the near-term. Perversely however, the much weaker jobs report helped to lift stocks as investors hoped that the disappointing report would put pressure on Congress to enact a new stimulus package before the end of the year.

For the week, stocks rose across the board with the S&P 500, DJIA and the NASDAQ up 1.7%, 1.2% and 2.1%, respectively. International stocks also rose with the MSCI EAFE rising 1.0% and emerging markets (MSCI EM) up 1.7%. The best performing sectors last week were energy, healthcare and technology and the worst performing was utilities. Also, indicative of a continued broadening of the stock markets, small cap stocks as represented by the Russell 2000 were up 2.0%.

Fixed income markets also reacted to the prospects for additional stimulus as bond prices dropped and the yield on the 10 year U.S. Treasury rose from 0.84% to 0.97%. Oil (WTI) closed at $46.26/barrel, up 1.60% last week. Gold rebounded last week to close at $1,843/oz.

This week look for economic reports on job openings and CPI both of which should be modest. The bigger news this week should be hopefully an approval by the FDA of the Pfizer Coronavirus vaccine followed shortly by Moderna’s .  Stay Well!

“I am prepared for the worst, but hope for the best.” – Benjamin Disraeli