December 7 – December 11 Week in Review
It was a mixed bag for the markets last week. The Russell 2000, up 1.0%, managed to close higher for its sixth straight weekly gain, while the S&P 500, down 1.0%, the Nasdaq Composite, down 0.7%, and the Dow Jones Industrial Average, down 0.6%, finished in negative territory. Each of the major indices set incremental new highs mid-week, but the market grew tired by the end of the week.
One of the biggest reported headwinds last week was the new supply of stock issued in the form of IPOs and secondary offerings. Airbnb more than doubled in its IPO, DoorDash surged 85% in its first day of trading, and Tesla sold $5 billion of common stock through an "at-the-market" offering program.
While Airbnb and DoorDash were the largest IPOs last week the smaller ones had similarly bullish reactions, which market observers interpreted as a sign of speculative fervor that warranted some notice. Still, lingering vaccine optimism and stimulus hopes helped mitigate any real selling.
Nine of the 11 S&P 500 sectors finished last week in the red. The real estate sector lagged with a 3% decline, and the influential information technology sector fell 1.4%. The energy and communication services sectors closed higher.
In vaccine news, the UK began inoculating its citizens with the Pfizer-BioNTech vaccine, and the FDA advisory panel recommended that their vaccine be approved for emergency use. In addition, peer-reviewed data indicated that the AstraZeneca-Oxford vaccine is safe and effective in preventing symptomatic COVID-19 and that it protects against severe disease and hospitalization.
On the political front Treasury Secretary Mnuchin offered a new $916 billion stimulus bill, but Democratic Congressional leadership preferred to focus on the $908 billion bipartisan plan instead. Unfortunately, both sides continued to accuse each other of essentially negotiating in bad faith.
In the bond market the 2 year Treasury yield fell 2 basis points to 0.13% and the 10 year yield fell eight basis points to 0.89%, as Treasuries bounced back from recent losses. As a reminder yields move inversely to prices.
In other markets the U.S. Dollar index closed marginally higher at 90.98, WTI crude continued to rally closing at $46.56 a barrel and gold closed at $1,843.50 an ounce.
December 14 – December 18 Economic Calendar