Week in Review: November 27, 2020
November 30, 2020
Recap & Commentary
The S&P 500 ended at a new record high as investors continued to focus on vaccine optimism, political clarity, and better-than-expected earnings. Global equity markets are on track for their strongest month on record. The dollar continued to weaken, posting its seventh consecutive weekly loss.
Chinese industrial profits recorded their strongest month in nine years as the pace of recovery appears to have received a tailwind from pent-up demand and government stimulus. Oil surged on China’s industrial news, even as OPEC+ tensions build amidst clashing opinions over sustained production cuts.
As of Saturday, the CDC had reported nearly 265k coronavirus-related deaths in the United States and hospitalizations reached 90k for the first time, as TSA data showed that millions of Americans traveled across the country for the Thanksgiving holiday. Los Angeles County instituted a new stay-at-home order that goes into effect Monday as the nation’s most populous county struggles to keep cases under desired thresholds. Meanwhile, distribution channels from production facilities to airlines wait at the ready to begin distributing Pfizer’s vaccine if it is approved by the FDA for emergency use.
Through Friday, 97% of S&P 500 companies had reported third quarter earnings, with 84% beating their consensus estimate.
Economic Bullet Points
A busy week for economic data could arguably be described as mixed. Housing and manufacturing generally exceeded expectations, while consumer and employment data generally missed expectations.
Measures of consumer confidence and sentiment contracted slightly from last month’s readings. Interestingly it was consumers’ outlooks for six months out, not current conditions, that pulled the broader readings down. That was somewhat counterintuitive given the current surge in coronavirus cases vs. the increasing likelihood that vaccines will widely available by mid-2021.
Consumer spending rose 0.5% in October, slightly better than expected but down from the 1.2% pace in September, and the slowest increase since April. Incomes, however, fell 0.7%, dragged down by a 6.2% decline in government transfers, including unemployment benefits. That was partially offset by a 0.7% increase in wages and salaries. The combination of slower spending and falling incomes does not bode well for the holiday shopping season, especially with no clear signs that Congress is close to passing additional stimulus.
Durable goods orders exceeded expectations, boosted by strong defense spending, offset in part by further declines in civilian aircraft orders. Core business spending rose 0.7%, slightly better than expected but down from the strong 1.9% increase recorded in September.
Housing data remained strong with October new home sales registering at an annualized pace of 999K. Compared to a year ago, new homes sales increased a very strong 41.5%.
Of Note
President-elect Joe Biden plans to nominate former Federal Reserve Chair Janet Yellen to the position of Treasury Secretary. If confirmed by the Senate, Ms. Yellen would become the first female to hold the job.
Market Indices Week of 11/27
| S&P 500 | 2.3% |
| Small Caps | 3.9% |
| Intl. Developed | 2.2% |
| Intl. Emerging | 1.8% |
| Commodities | 0.9% |
| U.S. Bond Market | 0.0% |
| 10-Year Treas. Yield | 0.84% |
| US Dollar | -0.7% |
| WTI Oil ($/bl) | $45 |
| Gold ($/oz) | $1,790 |
The Week Ahead
- Pending Home Sales
- ISM Manufacturing
- ISM Services
- Factory Orders
- Weekly Jobless Claims
- Nov. Employment Report
- Trade Balance
