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In this week’s recap: A COVID-19 vaccine spurs a stock market rally, even as more cases are reported and some areas renew lockdowns.

John Boyer, November 16, 2020

THE WEEK ON WALL STREET

News of a COVID-19 vaccine ignited a rally in economically sensitive stocks and a broad retreat in technology companies last week, though enthusiasm was tempered by reports of rising new infections and fresh lockdowns.

The Dow Jones Industrial Average surged 4.08%, while the Standard & Poor’s 500 rose 2.16%. The Nasdaq Composite index fell 0.55% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, jumped 4.01%.1,2,3

Vaccine Hopes

Reports of an effective COVID-19 vaccine sent stocks soaring on Monday as the end to economic uncertainty appeared to be in sight. Stocks that had been pummeled by economic lockdowns surged on the news, while the stay-at-home stocks suffered steep declines. Bond yields and oil prices both moved higher on expectations of increased economic activity.

Market enthusiasm evaporated in the days that followed, however, as higher COVID-19 infections, new lockdowns, and low expectations for a new fiscal stimulus package dampened the optimism brought on by the pending vaccine.

Stocks closed the week on a higher note, with cyclical stocks adding to their gains and technology companies shaving part of their losses. 

Clouds Over Chinese Capitalism?

The market was caught by surprise last week when Chinese regulatory authorities issued draft guidelines to address concerns over abusive monopolistic practices. Shares in some of the biggest Chinese technology companies dropped on the news. This follows the prior week’s suspension of a listing of a large initial public offering for one of the country’s leading fintech companies.

It’s difficult to say whether Chinese regulators are acting on concerns that western nations have with the dominance of Big Tech companies, or if they are attempting to rein in the power and influence of privately owned corporations. An answer may not be clear anytime soon, but investors will be watching.

T I P   O F   T H E   W E E K
Adult children may ask you to help them out with business financing or a down payment on a property. While it’s tempting to say yes, it’s may be best to determine if your personal finances can handle it.

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Retail Sales.

Wednesday: Housing Starts.

Thursday: Existing Home Sales, Jobless Claims, Index of Leading Economic Indicators.

Source: Econoday, November 13, 2020

Q U O T E   O F   T H E   W E E K

“What we obtain too cheap, we esteem too lightly.”

THOMAS PAINE

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

CITATIONS:

1. The Wall Street Journal, November 13, 2020

2. The Wall Street Journal, November 13, 2020

3. The Wall Street Journal, November 13, 2020