Market balances vaccine hopes, resurgence worries

11/23/20
  • Moderna vaccine news helps bump stocks to fresh records
  • Small caps, energy sector carry bullish banner
  • This week: Housing, GDP, FOMC minutes…and closed for Thanksgiving

Heading into the final full week of November, the US stock gauges are still hanging around their recent record highs as vaccine-driven optimism engages in a tug-of-war with a rising wave of COVID cases and renewed lockdowns.

The S&P 500 (SPX) hit a new closing high last Monday after Moderna (MRNA) announced its COVID vaccine was 94% effective in trials1—exactly one week after the index set its intraday record high after the Pfizer–BioNTech vaccine news—but sagged the remainder of the week:

Chart 1: S&P 500 (SPX), 7/30/20–11/20/20. S&P 500 (SPX) price chart. Another vaccine high.

Source: Power E*TRADE


The headline: Stocks flat to lower heading into holiday-shortened week.

The fine print: The Treasury Department’s decision to end some of the Federal Reserve lending programs put in place during the pandemic was criticized by some at the Fed,2 and appeared to weigh on stocks on Friday. On the upside, a couple of long-neglected areas of the market—small caps and the energy sector—led the market for a second-straight week.

The number: 6.85 million, the number of existing home sales in October—the latest estimate-topping data point suggesting that the housing market hasn’t yet cooled off.

The move: 67%, CIIC Merger Corp.’s (CIIC) Tuesday–Thursday rally last week.

The scorecard: The small-cap Russell 2000, which was the only major index to register a gain for the week, also leapfrogged the Dow’s year-to-date return:

US stock index performance table for week ending 11/20/20. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source (data): Power E*TRADE


Sector roundup: The strongest S&P 500 sectors last week were energy (+5.4%), materials (+1.4%), and industrials (+1.3%). The weakest sectors were utilities (-3.7%), health care (-2.7%), and real estate (-1.3%).

Highlight reel: On Wednesday Jumia Technologies (JMIA) jumped 19% to $20.47, while Joyy (YY) slid 26% to $73.66.

Futures action: After a solid rally last Monday, January WTI crude oil (CLF1) moved mostly sideways last week, but it kept upside pressure on its resistance level around $42.50/barrel. December gold (GCZ0) played the opposite game, loitering around support between $1,850–$1,875/ounce for most of the week. December copper (HGZ0) started and ended the week by hitting new contract highs, rallying more than 3% intraday on Friday to 3.3015.

Last week's biggest futures up moves: December cocoa (CCZ0) +25.2%, November bitcoin (BTCX0) +14.6%, lumber (LBSF1) +9%. Biggest down moves: December natural gas (NGZ0) -11.4%, December milk (DCZ0) -9.6%, December ethanol (ZKZ0) -6.1%.

Coming this week

The economic calendar will be pretty busy before US markets close Thursday for Thanksgiving (and close early on Friday):

Monday: Chicago Fed National Activity Index

Tuesday: S&P/Case-Shiller Home Price, FHFA Housing Price Index, Consumer Confidence

Wednesday: Durable Goods Orders, Goods Trade Balance (Adv.), GDP (2nd estimate), PCE Prices (Core Inflation), Personal Income and Spending, New Home Sales, FOMC minutes

Thursday: Thanksgiving (markets closed)

Friday: US equity markets close at 1 p.m. ET.

This week’s earnings include:

Monday: Agilent Technologies (A), Warner Music Group (WMG), Urban Outfitters (URBN)

Tuesday: Analog Devices (ADI), Burlington Stores (BURL), Best Buy (BBY), Tiffany (TIF), Dollar Tree (DLTR), Dell Technologies (Dell), HP (HPQ), Pure Storage (PSTG), Nordstrom (JWN), VMware (VMW), Medtronic (MDT)

Wednesday: Deere & Co. (DE)

Go to the E*TRADE market calendar for an up-to-date earnings schedule and complete list of splits, dividends, IPOs, and economic reports. The Active Trader Commentary also lists earnings announcements, IPOs and economic report times each morning.

Thanksgiving week market patterns

If a fairly busy economic calendar wasn’t enough to keep you interested in the market this week, here are a few things to keep in mind:

1. Since 1950, the S&P 500 has moved almost as much during the four-day (and more recently, three-and-a-half-day) Thanksgiving week (1.5% on average) as it has during an average five-day period (1.6%).3

The market has also established some fairly consistent tendencies around Turkey Day:

2. The SPX closed up the day before Thanksgiving 54 out of 70 years (77% of the time).

3. The SPX closed up the day after Thanksgiving in 50 years (71% of the time).

4. The SPX closed down the Monday after Thanksgiving in 43 years (62% of the time).

Just some food for thought in case you thought the stock market tends to go on an extended holiday around Thanksgiving.

 

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1 Nature. COVID vaccine excitement builds as Moderna reports third positive result. 11/16/20.

2 The Hill. Mnuchin asks Fed to return $455 billion in unspent COVID-19 emergency funds. 11/19/20.

3 Reflects S&P 500 (SPX) daily closing prices, 10/31/50–12/30/19. Thanksgiving week range was calculated as the absolute percentage change in the SPX from the Friday before the holiday to the Friday after it. Supporting document available upon request.

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