Todd’s Take on the Market

Equities climbed higher this past week as optimism surrounding a vaccine-led recovery overshadowed news of rising global COVID-19 death tolls. The S&P 500 ended the week higher at 1.72%, as investors remained optimistic about the FDA’s Dec 10th emergency vaccine authorization meeting. The FTSE 100 closed higher by 2.89% following the announcement that the UK will begin administering vaccines in the coming week. The Euro Stoxx 600 gained 0.23%.

Here at home, stocks had another winning week as the Dow climbed 1.16%, and the NASDAQ over 2%.  The NASDAQ is now up over 40% YTD. In a time where everyone is hunkered down, the NASDAQ climbs 40%. Everything is at a record despite all of the news, and this is how the markets interpret:

Rallying on Stimulus news once = cool. Rallying on Stimulus news a few times = sweet. Rallying every time Stimulus is brought up in the media even if it’s not agreed upon = galactic.

Jobless claims continue to be high. First-time claims for unemployment benefits totaled 712,000 last week, compared with 787,000 a week earlier and the Dow Jones estimate of 780,000, the Labor Department reported. The weekly total was the lowest of the coronavirus era though it is still well above the record level before the pandemic.

Renewed efforts to advance U.S. fiscal stimulus talks led government yields in major developed markets to soar this past week. The prospect of more aid also led to higher inflation expectations. However, below-consensus economic prints for November’s nonfarm payroll and manufacturing data weighed on market sentiment. The 10-year US Treasury yield saw a modest Friday pullback but still ended higher at 0.97%.

This week doesn’t bring us much to hinge on. Earnings have slowed, economic data is not useful, we are heading into a new Presidential era and the world awaits some sort of resolution to COVID-19. That’s what is driving everything at his point, nothing more—nothing less.

Stay tuned and we will keep you posted.

Todd Day, MBA

Portfolio Manager
Horizon Financial Services, LLC

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