After rising four out of the last five prior weeks, the major stock market averages took a well-deserved pause last week, posting moderate losses. The Dow Jones Industrial Average dipped .6% to 30,046, the NASDAQ Composite lost .7% to 12,378, and the Standard & Poor’s 500 Index dropped 1% to 3,663. Moving in the opposite direction was the Russell 2000 which gained 1% for the week.
Factors behind the weekly decline included some normal profit taking, the continuing impact of the pandemic, some weak economic data (with initial jobless claims jumping and coming in worse-than-expected), and disappointment over the fact we still don’t have another round of fiscal stimulus out of Washington. While both sides seem to agree on the need for more aid, liability protection for businesses and differences regarding state and local government aid remain sticking points.
Looking at some individual stocks making news last week, Disney rose over 13% Friday after the company announced its Disney+ service has 86.8 million subscribers and predicted it would have between 230-260 million subscribers by 2024. On the Initial Public Opening front, DoorDash and Airbnb gained 86% and 113% respectively on their first day of trading.
During the week ahead, the Federal Open Market Committee is scheduled to announce its policy decision on Wednesday (expectations are for no change in interest rates), and even though we are outside of earnings season, we’ll be getting earnings from an interesting batch of companies. Lennar, General Mills, Nike, and FedEx are all scheduled to report this week, with FedEx widely viewed as an economic bellwether.
Economic data points due out this week include November Retail Sales and November Housing Starts. Most importantly though, all eyes will be on the state of the pandemic. The markets are starting off on a positive start this morning with the Dow up over 200 points on reports Washington may now be closer to passing a stimulus package, along with hopes for a successful vaccine rollout!
All the best – Southport Station Financial Management, LLC