Analytics, 14 November 2020
Week 46 in Brief
How did the major indices perform?
US stocks closed modestly higher on Friday, notching some fresh records amid optimism over the prospects of vaccines and treatments for Covid-19 which has been spiking in Europe and the US. Markets remained sensitive to talks of another fiscal stimulus package and the aftermath of a contentious presidential election in the United States.
- On Friday, the Dow Jones Industrial Average closed up 399.64 points, or 1.4%, to reach 29,479.81, and briefly traded higher than its Feb. 12 closing record at 29,551.42; the S&P 500 gained 48.14 points to close at 3,585.15, for a gain of 1.4%, a fresh record; while the Nasdaq Composite climbed 119.70 points, a gain of 1%, ending at 11,829.29.
- For the week, the Dow gained 4.1%, the S&P 500 index added 2.2%, and the Nasdaq slipped 0.6%.
- The small-cap Russell 2000 beat them all, gaining 6.1% for the week and notching a fresh high of its own on Friday, at 17,44.04. The last time the Russell 2000 and the S&P 500 closed at a record high on the same day was Aug. 29, 2018, according to Dow Jones Market Data.
- The stock market is caught between the rapidly spreading virus and the promise of a vaccine, and this likely to drive trading in the week ahead, as it did in the past week.
- Earlier in the week Pfizer and BioNTech announced a promising vaccine that prompted investors to abandon technology stocks that benefit from the stay-at-home trend in favour of value-oriented plays that may benefit from the economic recovery, but the latter part of the week has been more mixed.
- Investors are also keeping an eye on Joe Biden’s transition to the White House after he has been projected the winner of the 2020 U.S. presidential election against incumbent Donald Trump.
Economic data & policy
- The US producer-price index advanced 0.3% last month. The index has risen six months in a row since the US economy reopened in May but wholesale inflation more broadly was largely muted. The increase in producer prices over the past 12 months edged up to 0.5% from 0.4%.
- The University of Michigan’s consumer sentiment report revealed worries about the coronavirus resurgence, with consumer sentiment in the U.S. falling to 77 in November from a previous reading of 81.8.
- Federal Reserve Chairman Jerome Powell cautioned investors not to overplay reports of vaccines, even as the market is growing doubtful that another coronavirus aid package can be crafted soon by Congress, with a gulf remaining between Republicans and Democrats over the breadth and scale of a relief package to help out-of-work Americans and troubled businesses.
Stocks in focus
- Better-than-expected results from the likes of Walt Disney and Cisco Systemic boosted the buying mood on Wall Street on Friday. Disney reported its first annual loss in more than 40 years, but a better-than-expected performance in the quarter pushed shares 2.1% higher to close at $138.36. Meanwhile, Cisco shares surged 7% after its quarterly results and outlook topped Wall Street estimates. Shares closed at $41.40.
- JetBlue Airways shares closed 5.8% higher Friday, closing at $14.16 after it provided details of its plans to limit onboard capacity for the busy holiday season and its plans to open all of its seats.
- DoorDash filed for a public stock offering on Friday and plans to list on the New York Stock Exchange under the ticker DASH. Sources say that Airbnb, Roblox, and Wish are also expected to make their filings public by early next week.
European markets finished mixed as of the most recent closing prices, with the pan-European Stoxx 600 virtually unchanged Friday.
- The pan-European Stoxx 600 Europe Index remained unchanged on Friday at 385.18.
- The CAC 40 gained 0.33% and the DAX rose 0.18%. The FTSE 100 lost 0.36%.
- Banking stocks outperformed major sectors by surging 16.5% this week, while travel stocks which have lost 25% of their value so far this year, ended their second week higher.
- Technology stocks that have tracked a surge in their U.S. peers as investors gravitate toward sectors that have seen higher demand in this year’s stay-at-home environment, gained 0.3% on Friday.
Asian markets finished lower on Friday with shares in China leading the region.
- The Shanghai Composite is down 0.86% while Japan’s Nikkei 225 is off 0.53% and Hong Kong’s Hang Seng is lower by 0.12%.
- In company news, Pinduoduo, Сhina’s third-largest e-commerce player after Alibaba and JD.com reported its first-ever profit while internet giant Tencent exceeded analyst expectations in their latest earnings reports.
Commodities and other assets
- Oil futures fell 2.4% in New York on Friday, but still posted the largest weekly gain in a month as optimism from the news of a potential Covid-19 vaccine breakthrough jolted markets earlier in the week.
- West Texas Intermediate for December delivery lost 99 cents to settle at $40.13 a barrel but gained 8.1% this week while Brent for January settlement slid 75 cents to $42.78 a barrel. Gasoline for December delivery declined 2.7% to $1.1254 a gallon
- Gold traded higher with the December contract closing up $12.90, or 0.7%, to settle at $1,886.20. The precious metal still notched its biggest weekly loss since September.
- Meanwhile, the yield on the 10-year U.S. Treasury note was little changed at 0.895% on Friday. Yields and bond prices move in opposite directions.
Currencies
- The dollar headed for its best week against the yen since March on Friday, as COVID-19 vaccine news lured investors out of the safe-haven Japanese yen, though riskier currencies have made little headway as the pandemic worsens in Europe and the United States.
- At 104.615 yen, the dollar had lost 0.46% against the Japanese currency on Friday morning in New York. The yen dropped around 2% versus the dollar on Monday. The Swiss franc firmed to 0.9132 against the dollar, after trading at 0.9192 mid-week.
- The ICE USD Index, a measure of the currency against a basket of six major rivals, was down 0.2% at 92.74.
Next week
- The stock market is caught between the rapidly spreading virus and the promise of a vaccine, and this is likely to drive trading in the week ahead, as it did in the past week.
- Big retailers Walmart, Home Depot, Lowe’s, and other companies report earnings in the week ahead.
- Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.