Telemus Weekly Market Review November 30th - December 4th, 2020

November 30 – December 4 Week in Review

It was another positive week for stocks. Each of the major indices set all-time highs last week, powered higher by both growth stocks and value stocks. The Nasdaq Composite claimed the top spot with a 2.1% gain followed by the small cap Russell 2000, up 2.0%, the S&P 500, up 1.7%, and the Dow Jones Industrial Average, up 1.0%.

Nine of the 11 S&P 500 sectors contributed to the advance. The energy sector rallied 4.5%, and the information technology sector rose 2.8%. The utilities sector, down 2.2%, was the weakest link by a wide margin.

There was not one specific catalyst that propelled stocks higher last week. Rather, it was the positive cumulative effect that developments had on an already bullish investor mindset that could best explain the gains. In simpler terms, the market climbed a wall of worry.

Stimulus talks were renewed. Moderna said its vaccine was 94.1% effective in preventing COVID-19 and 100% effective in protecting against serious outcomes. Pfizer and BioNTech received emergency approval for their COVID-19 vaccine in the UK. Apple and Tesla were upgraded to Buy ratings by a couple of analysts.

Regarding stimulus talks, Democratic Congressional leadership and some Republicans supported a proposed $908 billion bipartisan stimulus bill as a starting point for negotiations. House Speaker Pelosi spoke with Senate Majority Leader McConnell about attaching a smaller stimulus deal to the yearend spending bill.

It's not for certain that the mixed November employment report, which highlighted slower jobs growth, pushed lawmakers over the edge on Friday, but the market reacted as if the report had some influence on the negotiations.

In merger news Salesforce confirmed it agreed to acquire Slack in a cash and stock deal with an enterprise value of about $27.7 billion. Salesforce shares fell 9% for the week on concern over the hefty price tag.

In the Treasury market, the spread between the 2 year and 10 year Treasury widened by 14 bps to 83 bps, reaching its highest level since late 2017 in an affirmation of the market's upbeat economic outlook. The 2 year yield fell 1 basis point to 0.15% and the 10 year yield finished the week 13 basis points higher at 0.97%.

In other markets the U.S. Dollar weakened by 1.0% to 90.82, its lowest level since April 2018. WTI rose roughly 2% to end the week at $46.09 a barrel and gold gained almost 3% closing at $1,842 an ounce.

December 7 – December 11 Economic Calendar