Weekly Snapshot November 30th, 2020
Market Review: Week Ending 11/27/2020
Stocks continue to power through virus-induced evidence of the recovery’s pause as the S&P 500 Index rose 2.3% last week, closing at a record high of 3638.1 The Dow Jones Industrial Average made history, closing above 30,000 on Tuesday for the first time and is up over 13% in November, its strongest month since 1987 as previously left for dead blue-chips, such as Chevron, Honeywell, Boeing and American Express, are up 20-30% this month.2 The Nasdaq Composite and the Russell 2000 Index of small-cap stocks (up 20% in November) also made records last week as all segments of equities are strong.1 Investors welcomed the announcement of Janet Yellen’s nomination to be the next Treasury Secretary, comforted by her familiarity and working relationship with Federal Reserve Chair Powell, leading to growing expectations of additional fiscal and monetary stimulus. Stocks were again led by “reopening” beneficiaries and the hope for normalcy that vaccines bring, as the best performing S&P 500 sectors last week were Energy (+8.5%), Financials (+4.6%) and Consumer Cyclicals (+3.0%).2 Stocks that were down the most all year, like Carnival Cruise (+26%), Apache (+22%) and United Airlines (+14%) surged last week.2 This was despite the news of the record number Covid-19 deaths and hospitalization cases in the US on Friday, and economic reports (Weekly Jobless Claims, Consumer Confidence, and Personal Consumption/Income) that all showed slowdowns from the pace of recent readings as many states have begun to partially restrict activity.1 Even questions about the effectiveness of one of the soon-to-be approved vaccines, from AstraZeneca, could not topple investor confidence. Signs of investor confidence are evident, and some measures have now reached levels where future gains are less likely, though December is a seasonally strong month historically for stocks. In this “TINA” environment for stocks, we are reminded that Chairman Greenspan’s famous warning of “irrational exuberance” was issued in 1996, some four years before the piercing of the dot.com bubble in the spring of 2000.
WHAT WE WILL BE WATCHING THIS WEEK
- November’s ISM Manufacturing Index and November’s Nonfarm Payroll Report will be important to gauge the extent to which the recent surge in Covid-19 cases has impacted economic activity. Investors have thus far looked past evidence of a modest slowdown, but a significant decline may not be ignored after the market’s November large rally. Some pause is expected as the ISM Manufacturing Index reading of 59.3 in October was the highest in more than two years, and the consensus forecast for November job gains is +425k, down from October’s +638k, which itself was seen as a disappointment.3
As always, we appreciate your confidence in our team.
Fundamentum Investment Committee
Paul Danes, CFA® – Investment Committee
Trevor Forbes – Investment Committee
Robert Armagno – Investment Committee
Matt Dunn, CFA® – OSJ Supervisor
- Wall Street Journal, 11/27/20
- FactSet, 11/26/20
- Barron’s 11/27/20
Investment advice offered through Fundamentum LLC a registered investment advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the investment objective of any investment strategy will be attained. Investing involves risk including loss of principal. Past performance is no guarantee of future performance. All indices are unmanaged and may not be invested into directly.