We hope you all enjoyed Thanksgiving Day and the long weekend! Investors could certainly be thankful for the rising stock prices during the holiday-shortened trading last week. The Standard & Poor’s 500 Index gained 2.3% to 3,638 and the tech-heavy NASDAQ Composite added 3% to 12,206, which are both record highs. Also closing at a record high was the Russell 2000 Index which jumped 3.9% to 1,855. For it’s part, the venerable Dow Jones Industrial Average rose 2.2% to 29, 910. Although not a record high close to end the week, the Dow did hit a record high and trade above the 30,000 milestone during the week.
These gains and record closes came despite a surge in COVID-19 cases/hospitalizations and a soft-patch in economic data (including a rise in jobless claims). Outweighing these negative factors are less election uncertainty/anxiety along with continued optimism surrounding a vaccine. The stock market has been rallying on the news of coming effective vaccines, and this has been the most powerful force behind the increase in stock prices. Remember, the market is a discounting mechanism, it is forward looking and bases its current price on what it believes future conditions will be!
Looking to the week ahead – markets will be tracking Federal Reserve Chair Powell’s testimony before Congress regarding the CARES Act, and the Fed will also be releasing its final Beige Book of the year. The beige book is a report on economic conditions throughout the country and it is used by the Federal Open Market Committee to make policy decisions. The economic data point to watch for in the coming week is the November Jobs Report which is due out on Friday. Consensus estimates are for the economy to add 425,000 jobs and for the unemployment rate to come in at 6.8%, which would be a notch better than October’s number.
We’ll also get a handful of diverse/interesting earnings reports to review this week, including results from Zoom Video Communications, Salesforce.Com, Dollar General, Cloudera, Snowflake, Kroger and Ulta Beauty. As always, please contact us with any questions you may have or if you would like to set up a meeting.
All the best – Southport Station Financial Management, LLC