Market Recap
US Markets:
Vaccine-related euphoria once again permeated the markets as stocks rose to start the week after AstraZeneca and the University of Oxford said their coronavirus vaccine was up to 90% effective. This partnership now has the third prospective promising vaccine candidate to hopefully eradicate the coronavirus.
The Dow Jones closed 327.79 points higher, or 1.1%, at 29.591.27. The S&P 500 gained 0.6% and the Nasdaq relatively lagged and advanced 0.2%. The small-cap Russell 2000 index once again outperformed the larger indices, rising by 1.93%.
The Dow hit its session high after news leaked that President-elect Joe Biden would nominate former Federal Reserve Chair Janet Yellen for Treasury Secretary. Yellen is a popular name among investors since she oversaw a broad economic expansion during her term as Fed chair from 2014 to 2018. Rates remained low during her time as Chair, and the S&P 500 rose nearly 60%.
Strong economic data also boosted sentiment. IHS Markit said their U.S. manufacturing and services purchasing managers’ indexes hit multiyear highs. The flash U.S. services index rose to 57.7, its highest level in more than five years, and the manufacturing PMI popped to 56.7, its highest level in over six years.
While sentiment is positive today, there are still concerns. The markets will inevitably wrestle with these concerns until COVID is eradicated for good. The U.S. reported a record-high spike of over 195,500 new cases on Friday, with concerns that this number could surge further after the Thanksgiving holiday.
The surge in COVID has led to re-imposed restrictions in several places. California Gov. Gavin Newsom re-instituted a “Stay at Home Order” and just shut down all forms of dining, for example.
Both JP Morgan and Goldman Sachs have cut their GDP forecasts. JP Morgan said that shutdown measures would “likely deliver negative growth,” and slashed its first-quarter GDP outlook to a 1% contraction. Goldman Sachs also cut its fourth-quarter GDP forecast along with its economic growth estimate for the first quarter of 2021. Goldman now expects the U.S. economy to grow by 3.5% in the fourth quarter, compared to the previous forecast of 4.5%, and sees economic growth of just 1% in Q1 2021, compared to the previous estimate of 3.5%.
Cryptocurrency:
Major cryptocurrencies did not move much today. Bitcoin continues to hover around its $18,500 resistance level, and continues its record run towards $20,000. However, the crypto story of the day is XRP. XRP skyrocketed by over 21% today. In fact, while Bitcoin’s value has more than doubled this year, rallied 75% in less than three months, and gained almost 400% since March, XRP has quietly been surging too. In the past month alone, the price of XRP has rallied 91% due to the rise in unique addresses, buybacks from Ripple, and the possibility of a new product release.
Overall Market:
European stocks opened at a 9-month high, yet closed little-changed. Vaccine optimism faded as investors digested weak PMI data and awaited news on Brexit talks. Flash PMI numbers suggested that the Eurozone private sector shrank more than expected in November, as countries introduced more shutdown measures to combat the spread of COVID. Canada’s TSX kept up its hot streak and rose for a third consecutive session. Astrazeneca and Oxford’s vaccine news led Canadian energy stocks higher such as Ensign Energy Services which surged almost 10%. Wholesale trade in Canada also rose by 0.9% in October, which would mark the sixth monthly gain in a row.
Despite the very real fears of COVID spikes harming the economy, gold lagged yet again and hit a 4 month low. Gold slumped to $1,831 an ounce as investors began running back towards riskier assets due to the vaccine news and stronger-than-expected US business activity data.
WHATS UP
Recovery stocks led the way again, as has been the pattern whenever positive vaccine data comes in. Shares of Carnival Corp. gained 4.8%, while United Airlines rose 2.6%. Major tech companies lagged, following the recovery stock day trends. Apple dropped nearly 3%, and Netflix slid 2.4%. Facebook, Amazon, Alphabet and Microsoft all posted slight losses as well.
Source: CNBC, TradingEconomics, Stockcharts, Yahoo! Finance
