Monday Morning Market Memo – November 16, 2020

Monday Morning Market Memo – November 16, 2020

Good morning,

News that was great for the world last week – Pfizer announcing data showing its COVID-19 vaccine candidate is 90% plus effective – was also great for the stock market.  The Dow Jones Industrial Average gained 4.1%, the Standard & Poor’s 500 Index added 2.2% to hit an all-time high of 3,585.  The Russell 2000 which tracks the performance of small cap stocks also ended the week at a record high, jumping 6.1%.  Looking at some sector performance, energy stocks surged 16.5% and financials added over 8% as these are some of the groups seen to benefit considerably from an effective vaccine.

Moving in the opposite direction last week was the NASDAQ Composite, which declined .6% (its third weekly loss in the last four weeks) as investors rotated out of big tech names that have been the market leaders.  Money moved from momentum technology and “stay at home” stocks into cyclicals such as oil, banks, and industrials which are expected to perform better if and when the economy returns to normalcy, and the economy fully reopens upon vaccine distribution.

Looking to the week ahead, we are starting off on a positive note as Moderna said trial data showed its vaccine to be more than 94% effective in preventing COVID-19, with the company’s CEO calling it a “game changer”.  This contributed to an over 400 point rally in the Dow this morning, as the consensus estimates were that COVID-19 vaccines would not have such high effective rates.  Away from tracking developments regarding the pandemic, it is what we refer to as retail week.

Government data on October Retail Sales is expected to show an increase of .5%.  We’ll also be getting earnings reports from retailers including TargetKohl’sTJX, BJ’s Wholesale ClubMacy’sWalmartHome DepotLowe’s and Foot Locker.  Away from the retail sector, other notable companies reporting this week include BaiduNvidia, Tyson Foods, JD.Com, and Palo Alto Networks.

All the best – Southport Station Financial Management, LLC