The Market Today

CORONAVIRUS UPDATE (VS Coronavirus Chartbook – PDF)

Monitoring the Virus Headlines – Cases: Virus cases in Europe have turned notably lower in recent days, as they have in the U.S. even more recently.  Based on data released through Sunday, the 7-day growth rate has turned lower than the 14-day growth rate in 34 states – an indication of a slowing rate of spread. Just one week ago, almost every state was seeing an acceleration of cases.

TODAY’S CALENDAR

Cyber Monday: Today is Cyber Monday, an even more notable day of shopping this year given the migration to online sales and the economy’s dependence on the consumer.  Black Friday’s in-person sales were reportedly disappointing, another blow to traditional brick-mortar-retailers.

Home Sales, Dallas Fed Index, Fedspeak, Zoom Earnings: Pending home sales, released at 9:00 a.m. CT, are expected to have risen 0.8% in October.  At 9:30 a.m., the Dallas Fed’s regional report on manufacturing activity is expected to show activity remain positive, but slow from October’s level.  Richmond Fed Bank President Barkin is slated to speak at 11:00 a.m.  Also of note, Zoom is scheduled to report earnings today.  Arizona is expected to certify its state election results today.

OVERNIGHT TRADING

Stellar November for Risk Assets Despite Lackluster Final Day: Despite scattered gains in a handful of countries around the world, global equities are mostly lower Monday as they ready to close out an impressive November rally. Stocks in Asia closed down 1.6% earlier, Europe’s Stoxx 600 slumped at the open but was back near breakeven at 7 a.m. CT, and U.S. futures were mixed. Despite the lackluster start to the week, MSCI’s Asia Pacific Index gained more than 10% in November to register its best monthly gain since 2009. Europe’s Stoxx 600 is on track for a nearly 15% gain this month, its best ever recorded. Through Friday, the Dow had gained 12.9% in November, its best month since 1987, while the S&P 500 was on track for its best month since April and second-best since 1987.

Vaccine Hopes Continue: The virus surged around the globe in November, leading to the rollout of new restrictions in many countries and major cities around the world and many signs of the recovery slowing in the most timely of economic data. However, risk assets such as equities and oil rallied while safe havens such as the Dollar and gold declined. Results from late-stage trials from several leading vaccine candidates gave investors hope that the current wave of the outbreak may be the last. Earlier Monday, Moderna announced that final results showed its vaccine to be more than 94% effective at stopping the coronavirus and said it would seek approval for emergency use in both the U.S. and Europe. A vaccine has been seen as the ultimate determinant of when sustained economic recovery can begin. At 7:30 a.m. CT, Treasury yields were higher, leading smaller yield increases across most of Europe. The 2-year Treasury yield was up 0.4 bps to 0.16% and the 10-year yield had added 1.6 bps to 0.85%.

NOTEWORTHY NEWS

ICYMI – November 27, 2020 Weekly Market Recap: Following a couple of days of upbeat trading which boosted stocks to new records, the Dow and S&P 500 both declined Wednesday after a flood of mixed economic data included a second weekly rise in jobless claims. Stocks improved prior to Wednesday’s stuffed economic calendar in response to more positive vaccine news, a market-friendly pick for Treasury Secretary in former Fed Chairwoman Janet Yellen, and the beginning of the presidential transition process. However, a week’s worth of economic reports crammed into a couple of hours on Wednesday offered a mixed assessment of recent economic trends and included the first back-to-back weekly increases in new jobless claims since July; total claims in all programs rose for the first time since early September. The recent virus surge has led to the return of restrictions across many states, creating concerns that the combination could weigh on the pace of recovery. This was a risk discussed by the Fed at their November meeting according to the Minutes released last Wednesday that also included a lengthy discussion of options for altering asset purchases to add more accommodation, a decision officials expect offer guidance on “fairly soon.” Markets were closed Thursday for Thanksgiving and shut down early on Friday. For the week, after a small recovery on Friday, the S&P 500 gained 2.3% to end at a record. The 10-year yield added 1.4 bps to end at 0.84%. Click here to view the full recap.