Month: December 2020

The Markets (as of market close December 24, 2020)

Stocks rallied by the end of the day last Monday, paring losses from a morning plunge. Strength in bank stocks and financials helped stem the tide as the other major market sectors generally sank. Investors were hit with news that a new strain of the COVID virus was moving rapidly through the United Kingdom, prompting a major sell-off in European stocks. Crude oil prices and Treasury yields fell, while the dollar advanced.

The Nasdaq reached another record high last Tuesday and the Russell 2000 gained 1.0%, but the remaining benchmark indexes ended the day in the red. The Dow closed down 0.7%, the Global Dow dropped 0.4%, and the S&P 500 lost 0.2%. Information technology and real estate were the only sectors to post gains. Similar to the previous day, Treasury yields and crude oil prices decreased, while the dollar rose.

Energy and financials drove the market higher last Wednesday. The S&P 500 ended a three-day losing streak, but just barely, eking out a 0.1% gain. The Global Dow climbed 1.0% after an outline of a post-Brexit trade deal was reached. The Russell 2000 advanced 0.9% and the Dow closed 0.4% higher. The Nasdaq fell 0.3% on the day. Treasury yields and crude oil prices gained, while the dollar fell.

The stock market closed early last Thursday in observance of Friday’s holiday. Equities were mixed on the day, with the S&P 500, the Nasdaq, the Dow, and the Global Dow posting gains, while the Russell 2000 lost value. Crude oil prices advanced, while Treasury yields and the dollar dropped. Utilities, real estate, materials, and information technology were the only sectors that gained more than 0.5%.

Christmas week resulted in mixed returns for stocks. The Russell 2000 led the way, followed by the Nasdaq and the Dow. The S&P 500 and the Global Dow dipped. Overall, investors continued to stay with stocks, despite rising COVID-19 cases and stalled developments on the latest stimulus package. The Nasdaq continued to climb past last year’s closing mark, trailed by the Russell 2000, the S&P 500, the Global Dow, and the Dow.

Crude oil prices ended the holiday-shortened week lower, closing at $48.23 per barrel by Thursday afternoon, down from the prior week’s price of $49.05 per barrel. The price of gold (COMEX) closed last week at $1,883.20, down from the prior week’s price of $1,886.30. The national average retail price for regular gasoline was $2.224 per gallon on December 21, $0.066 higher than the prior week’s price but $0.308 less than a year ago.

Stock Market Indexes

Market/Index	2019 Close	Prior Week	As of 12/24	Weekly Change	YTD Change
DJIA	28,538.44	30,179.05	30,199.87	0.07%	5.82%
Nasdaq	8,972.60	12,755.64	12,804.73	0.38%	42.71%
S&P 500	3,230.78	3,709.41	3,703.06	-0.17%	14.62%
Russell 2000	1,668.47	1,969.99	2,003.95	1.72%	20.11%
Global Dow	3,251.24	3,479.61	3,447.69	-0.92%	6.04%
Fed. Funds target rate	1.50%-1.75%	0.00%-0.25%	0.00%-0.25%	0 bps	-150 bps
10-year Treasuries	1.91%	0.94%	0.92%	-2 bps	-99 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• The economy advanced at an annualized rate of 33.4%, according to the third and final estimate for third-quarter gross domestic product. In the second quarter, GDP decreased 31.4%. The increase in third-quarter GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to COVID-19. The gain in GDP reflected increases in personal consumption expenditures, private inventory investment, exports, nonresidential fixed investment, and residential fixed investment that were partially offset by decreases in federal government spending, state and local government spending, and imports, which are a subtraction in the calculation of GDP. The personal consumption expenditures price index increased 3.7% in the third quarter, in contrast to a decrease of 1.6% in the second quarter. Excluding food and energy prices, the PCE price index increased 3.4%, in contrast to a decrease of 0.8% in the second quarter.
• Inflationary pressures have been nonexistent over the past few months. According to the latest report from the Bureau of Economic Analysis, the personal consumption price index (a measure of inflationary trends relied upon by the Federal Reserve) showed no movement in both October and November. Consumer prices are up only 1.1% over the past 12 months ended in November. Personal income fell 1.1% in November, while disposable (after-tax) personal income dropped 1.2%. Consumer spending, as measured by personal consumption expenditures, also decreased 0.4% in November. The November estimate for personal income and outlays was impacted by the response to the COVID-19 virus. Pandemic-related assistance programs continued to wind down, which affected consumer income and spending to some extent.
• New orders for manufactured durable goods in November increased 0.9%, according to the latest report from the U.S. Census Bureau. This increase, up seven consecutive months, followed a 1.8% October increase. Excluding transportation, new orders increased 0.4%. Excluding defense, new orders increased 0.7%. Transportation equipment, up six of the last seven months, led the increase, climbing 1.9%. Shipments of manufactured durable goods in November, up six of the last seven months, increased 0.3%. This followed a 1.5% October increase. Unfilled orders for manufactured durable goods in November, down eight of the last nine months, decreased 0.1%. This followed a 0.2% October decrease. Inventories of manufactured durable goods in November, up three consecutive months, increased 0.9%. This followed a 0.3% October increase.
• The housing sector slowed in November. Sales of existing homes decreased 2.5% in November, ending a streak of five consecutive monthly increases. Year over year, existing home sales are up 25.8%. The median existing home price in November was $310,800, 0.7% below October’s price but 14.6% ahead of the November 2019 median price. Total housing inventory in November sat at an all-time low of 2.3 months. Sales of existing single-family homes also fell in November, down 2.4% from the previous month’s total. The median existing single-family home price was $315,500 in November, down from $317,700 in October but up 15.1% from November 2019.
• Sales of new single-family houses in November fell 11.0% but are up 20.8% over the November 2019 pace. The median sales price of new houses sold in November 2020 was $335,300. The average sales price was $390,100. There is an inventory supply of 4.1 months at the current sales pace.
• For the week ended December 19, there were 803,000 new claims for unemployment insurance, a decrease of 89,000 from the previous week’s level, which was revised up by 7,000. According to the Department of Labor, the advance rate for insured unemployment claims was 3.6% for the week ended December 12, a decrease of 0.2 percentage point from the prior week’s rate. For comparison, during the same period last year, there were 218,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 1.2%. The advance number of those receiving unemployment insurance benefits during the week ended December 12 was 5,337,000, a decrease of 170,000 from the prior week’s level, which was revised down by 1,000. States and territories with the highest insured unemployment rates in the week ended December 5 were in the Virgin Islands (8.3%), Alaska (6.6%), California (6.6%), New Mexico (6.5%), Nevada (6.1%), Hawaii (5.6%), Illinois (5.6%), Pennsylvania (5.4%), Puerto Rico (5.2%), and Kansas (5.0%). The largest increases in initial claims for the week ended December 12 were in Illinois (+30,743), California (+25,664), Kansas (+5,637), Delaware (+2,355), and Ohio (+1,996), while the largest decreases were in Georgia (-9,301), Minnesota (-9,158), Texas (-8,876), Indiana (-7,920), and Wisconsin (-7,038).

Eye on the Week Ahead The week between Christmas and New Year’ Day offers very little in terms of economic reports, with only the international trade in goods report for November available. However, the week will be full of news about the ongoing dissemination of the COVID-19 vaccine and the latest stimulus package passed by Congress last week.

The Markets (as of market close December 18, 2020)

Tech stocks and consumer shares opened last week on an upswing. Unfortunately, the rest of the market lagged. Investors faced the prospect of more stringent restrictions as COVID-19 cases continued to surge. The Nasdaq (0.5%) and the Russell 2000 (0.1%) posted gains, while the Dow (-0.6%), the S&P 500 (-0.4%), and the Global Dow (-0.2%) fell. Crude oil prices rose, although the energy sector dropped more than 3.5%. The dollar and 10-year Treasury yields declined. On the positive side, vaccines were rolled out in parts of the United States last Monday.

Stocks rebounded last Tuesday on news of the approval of a second virus vaccine and positive developments on additional fiscal stimulus. Each of the benchmark indexes listed here gained value, led by the Russell 2000 (2.4%), followed by the S&P 500 (1.3%), the Nasdaq (1.3%), the Dow (1.1%), and the Global Dow (1.0%). Treasury yields jumped higher as did crude oil prices. The dollar lost value. All of the major market sectors posted gains, with utilities, energy, and materials leading the way.

Investors got more encouraging news on movement toward a fiscal stimulus package as congressional leaders continued to negotiate last Wednesday. Mega-caps, retail, and information technology drove stocks higher as the Nasdaq (0.5%), the S&P 500 (0.2%), and the Global Dow (0.4%) advanced. The Russell 2000 (-0.3%) and the Dow (-0.2%) fell. Treasury yields dropped as bond prices rose. Crude oil prices advanced for the third consecutive day, while the dollar mostly declined.

Investors continued to ride the wave of hope for a new stimulus package before the end of the year. Both the S&P 500 and the Nasdaq reached record highs by the close of trading last Thursday, while the Russell 2000 (1.3%), the Global Dow (0.5%), and the Dow (0.5%) posted solid gains. Crude oil prices and Treasury yields rose, while the dollar fell. Among the sectors, real estate, materials, health care, and utilities led the way, while communication services and energy lagged.

Last week ended on a sour note as more congressional haggling over a fiscal stimulus package dominated the day’s news. Stocks closed lower on the day with the Global Dow falling 0.5%, followed by the Dow and the Russell 2000, each of which dropped 0.4%. The S&P 500 and the Nasdaq came down from their record highs, losing 0.4% and 0.1%, respectively. Materials, health care, industrials, and consumer staples were the only market sectors to gain ground last Friday, but only marginally. Crude oil prices, the dollar, and Treasury yields all closed higher.

Despite the ongoing negotiations over additional fiscal stimulus, investors continued to see value in stocks, pushing each of the benchmark indexes higher last week. The Nasdaq and the Russell 2000 enjoyed solid gains, followed by the S&P 500, the Global Dow, and the Dow. Barring a major downturn, all of the indexes will close the year ahead of their 2019 marks, with the Nasdaq nearly 45.0% higher, followed by the Russell 2000, the S&P 500, the Global Dow, and the Dow.

Crude oil prices advanced for the third consecutive week, closing at $49.05 per barrel by late Friday afternoon, up from the prior week’s price of $46.58 per barrel. The price of gold (COMEX) closed at $1,886.30 last week, up from the prior week’s price of $1,842.90. The national average retail price for regular gasoline was $2.158 per gallon on December 14, $0.002 higher than the prior week’s price but $0.378 less than a year ago.

Stock Market Indexes

Market/Index	2019 Close	Prior Week	As of 12/18	Weekly Change	YTD Change
DJIA	28,538.44	30,046.37	30,179.05	0.44%	5.75%
Nasdaq	8,972.60	12,377.87	12,755.64	3.05%	42.16%
S&P 500	3,230.78	3,663.46	3,709.41	1.25%	14.81%
Russell 2000	1,668.47	1,911.70	1,969.99	3.05%	18.07%
Global Dow	3,251.24	3,447.97	3,479.61	0.92%	7.02%
Fed. Funds target rate	1.50%-1.75%	0.00%-0.25%	0.00%-0.25%	0 bps	-150 bps
10-year Treasuries	1.91%	0.89%	0.94%	5 bps	-97 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• Following its meeting last week, the Federal Open Market Committee decided to keep the target range for the federal funds rate at 0.00%-0.25%. The Committee expects it will maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2.0% and is on track to moderately exceed 2.0% for some time. The Committee will also continue to increase its holdings of Treasury securities and mortgage-backed securities at the current pace.
• Prices for U.S. imports ticked up 0.1% in November after edging down 0.1% in October. Higher fuel prices in November (4.3%) more than offset lower nonfuel prices. Despite the recent increases, prices for imports decreased 1.0% from November 2019 to November 2020. Export prices also rose in November, increasing 0.6% following advances of 0.2% in October. Export prices fell 1.1% from November 2019 to November 2020, despite increases in each of the last six months.
• Retail sales stepped back in November, falling 1.1% behind their October pace. However, retail sales are 4.1% ahead of last November’s totals. Retail trade sales were down 0.8% from October, but 7.1% above last year. Nonstore (online) retailers were up 0.2% in November and are 29.2% ahead of November 2019. While overall sales at the retail level have been impacted by the pandemic, particularly hard hit were sales at food services and drinking places (-4.0%), clothing and clothing accessories stores (-6.8%), motor vehicle and parts dealers (-1.7%), electronics and appliance stores (-3.5%), and gasoline stations (-2.4%).
• Industrial production continued to accelerate in November, increasing 0.4% from October. After falling 16.5% between February and April, industrial production has risen to within 5% of its pre-pandemic (February) level. In November, manufacturing output advanced 0.8% for its seventh consecutive monthly gain. Manufacturing of motor vehicles and parts increased 5.3% last month, contributing significantly to the gain in factory production. The output of utilities declined 4.3% as warmer-than-usual temperatures reduced the demand for heating. Mining production increased 2.3% after decreasing 0.7% in October. Overall, total industrial production was 5.5% lower in November than it was a year earlier.
• The housing sector continued to show strength in November. The number of residential building permits issued grew by 6.2% over October’s rate. Single-family authorizations in November were 1.3% above the October figure. Housing starts increased 1.2% in November over October. Single-family housing starts in November were 0.4% above the October number. Privately-owned housing completions in November were 12.1% below the October estimate. Single-family housing completions in November were 0.6% below the October rate.
• For the week ended December 12, there were 885,000 new claims for unemployment insurance, an increase of 23,000 from the previous week’s level, which was revised up by 9,000. According to the Department of Labor, the advance rate for insured unemployment claims was 3.8% for the week ended December 5, a decrease of 0.1 percentage point from the prior week’s rate. For comparison, during the same period last year, there were 229,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 1.2%. The advance number of those receiving unemployment insurance benefits during the week ended December 5 was 5,508,000, a decrease of 273,000 from the prior week’s level, which was revised up by 24,000. States and territories with the highest insured unemployment rates in the week ended November 28 were California (7.0%), New Mexico (6.7%), Alaska (6.6%), Hawaii (6.5%), Nevada (6.1%), Illinois (5.6%), Puerto Rico (5.6%), Pennsylvania (5.5%), Massachusetts (5.4%), and the Virgin Islands (5.4%). The largest increases in initial claims for the week ended December 5 were in California (+48,341), Illinois (+33,485), Texas (+22,729), Pennsylvania (+16,955), and New York (+16,814), while the largest decreases were in Louisiana (-2,666), Kentucky (-1,151), New Mexico (-378), and North Dakota (96).

Eye on the Week Ahead

Christmas week brings with it plenty of economic reports. The final estimate of the third-quarter gross domestic product is available. The second estimate showed that the economy advanced at an annual rate of 33.1% in the third quarter. That figure is not likely to change in the third and last estimate. Also out this week is the November report on personal income and spending. Personal income fell 0.7% in October, while consumer spending increased 0.5%. Prices for consumer goods and services were unchanged in October and have risen only 1.2% over the last 12 months, indicative of muted inflationary trends.

The Markets (as of market close December 11, 2020)

The Nasdaq opened the week by reaching a new high last Monday after climbing for the ninth straight day. Otherwise, stocks tumbled, as the rapid rise in COVID-19 cases had investors worried that more restrictions might be forthcoming. The Global Dow and the Dow each fell 0.5%, followed by the S&P 500 (-0.2%) and the Russell 2000 (-0.1%). Communication, technology, and utilities were the only sectors to gain ground. Treasury yields and crude oil prices declined, while the dollar was mostly higher.

Positive news on fiscal stimulus talks and COVID-19 vaccines helped drive stocks higher last Tuesday. The Russell 2000 notched a gain of 1.4% on the day, followed by the Nasdaq (0.5%), the Dow (0.35%), and the S&P 500 (0.3%). The Global Dow fell 0.2%. Crude oil prices and the dollar rose, while Treasury yields sank. Sectors driving the market higher included energy, consumer staples, health care, and materials.

The promising rhetoric on fiscal stimulus that helped drive stocks higher last Tuesday was replaced by an apparent deadlock among lawmakers on Wednesday. Several of the largest tech companies saw their stock plunge following a massive sell-off by investors. The Nasdaq, which fell nearly 2.0%, suffered its worst day in a month. The S&P 500 and the Russell 2000 lost nearly 1.0% on the day, while the Dow dropped 0.4%. The Global Dow avoided a tumble, gaining 0.1%. Treasury bond prices fell driving yields higher. Crude oil prices dipped, while the dollar advanced.

Stocks were mixed last Thursday with the Nasdaq and the Russell 2000 posting gains, while the Dow and the S&P 500 fell. The Global Dow broke even by the end of the day’s trading. A spike in the number of jobless claims didn’t help investor confidence. Among the sectors, energy surged, with financials and information technology eking out minimal gains. Crude oil prices rose, while Treasury yields and the dollar fell.

Equities closed generally lower last Friday with only the Dow posting a modest 0.2% gain. The Global Dow (-0.7%), the Russell 2000 (-0.6%), the Nasdaq (-0.2%), and the S&P 500 (-0.1%) each lost value by the close of Friday’s trading. Crude oil prices and Treasury yields fell, while the dollar was mixed. A few of the market sectors advanced led by communication services (1.2%), consumer staples (0.3%), industrials (0.2%), and utilities (0.2%). Energy and financials fell nearly 1.0%.

Stocks closed generally lower for the week, led by the Global Dow, followed by the S&P 500, the Nasdaq, and the Dow. The small caps of the Russell 2000 posted a notable gain of more than 1.0% for the week. Investors got mixed messages on progress toward more fiscal stimulus, and concerns about the availability of a COVID-19 vaccine weighed on investors. Year to date, the Nasdaq remains well ahead of last year’s pace, followed by the Russell 2000, the S&P 500, the Global Dow, and the Dow.

Crude oil prices advanced again last week, closing at $46.58 per barrel by late Friday afternoon, up from the prior week’s price of $46.04 per barrel. The price of gold (COMEX) closed at $1,842.90 last week, up from the prior week’s price of $1,840.40. The national average retail price for regular gasoline was $2.156 per gallon on December 7, $0.036 higher than the prior week’s price but $0.405 less than a year ago.

Stock Market Indexes

Market/Index	2019 Close	Prior Week	As of 12/11	Weekly Change	YTD Change
DJIA	28,538.44	30,218.26	30,046.37	-0.57%	5.28%
Nasdaq	8,972.60	12,464.23	12,377.87	-0.69%	37.95%
S&P 500	3,230.78	3,699.12	3,663.46	-0.96%	13.39%
Russell 2000	1,668.47	1,892.45	1,911.70	1.02%	14.58%
Global Dow	3,251.24	3,489.98	3,447.97	-1.20%	6.05%
Fed. Funds target rate	1.50%-1.75%	0.00%-0.25%	0.00%-0.25%	0 bps	-150 bps
10-year Treasuries	1.91%	0.96%	0.89%	-7 bps	-102 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• The Consumer Price Index increased 0.2% in November after being unchanged in October. Over the past 12 months, the CPI increased 1.2%. Last month, food prices fell 0.1%, and prices for used cars and trucks dipped 1.3%. Energy prices rose for the sixth consecutive month, after climbing 0.4% in November. Energy prices were driven by a 3.6% surge in fuel oil prices. Also climbing higher were prices for utility (piped) gas service (3.1%), transportation services (1.8%), apparel (0.9%), and electricity (0.5%).
• Prices that producers received for goods and services advanced 0.1% in November after climbing 0.3% in October. Producer prices increased 0.8% for the 12 months ended in November, the largest increase since moving up 1.1% for the 12 months ended in February. Prices less foods, energy, and trade services advanced 0.1% in November, the seventh consecutive monthly increase. For the 12 months ended in November, prices less foods, energy, and trade services moved up 0.9%, the largest rise since a 1.0% increase for the 12 months ended in March. In November, prices for goods rose 0.4%, driven by a 1.2% increase in energy prices. Producer prices for services were unchanged in November.
• The government deficit came in at a lower-than-expected $145 billion in November, well below the November 2019 deficit of $209 billion. However, the deficit for the first two months of the 2021 fiscal year is 25% greater than the same period last fiscal year. Government expenditures for fiscal year 2021 were 9% higher, while receipts were 3% lower than last year’s totals.
• There were 6.7 million job openings in October, according to the latest Job Openings and Labor Turnover Summary. This represents an increase of 200,000 job openings from September’s total. Job openings increased in health care and social assistance, and state and local government education. Job openings decreased in a number of industries, with the largest decreases in retail trade, accommodation and food services, and finance and insurance. The number of hires in October, at 5.8 million, was little changed from the previous month. The number of total separations increased by roughly 300,000 to 5.1 million in October. Over the 12 months ended in October, hires totaled 70.4 million and separations totaled 76.1 million, yielding a net employment loss of 5.7 million.
• For the week ended December 5, there were 853,000 new claims for unemployment insurance, an increase of 137,000 from the previous week’s level, which was revised up by 4,000. According to the Department of Labor, the advance rate for insured unemployment claims was 3.9% for the week ended November 28, an increase of 0.1 percentage point from the prior week’s rate. For comparison, during the same period last year, there were 237,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 1.2%. The advance number of those receiving unemployment insurance benefits during the week ended November 28 was 5,757,000, an increase of 230,000 from the prior week’s level, which was revised up by 7,000. The highest insured unemployment rates in the week ended November 21 were in Alaska (6.3%), California (6.3%), New Mexico (6.1%), Nevada (6.0%), Hawaii (5.6%), Massachusetts (5.1%), the District of Columbia (5.0%), and Illinois (5.0%). The largest increases in initial claims for the week ended November 28 were in Illinois (+8,535), Oregon (+5,461), Colorado (+1,905), Indiana (+1,746), and Louisiana (+1,735), while the largest decreases were in California (-37,803), Texas (-14,123), Michigan (-10,976), Georgia (-9,905), and Washington (-7,881).

Eye on the Week Ahead

The Federal Open Market Committee meets this week. The Committee is not expected to alter the current federal funds rate range. The Federal Reserve’s report on industrial production for November is also out this week. October saw industrial production increase 1.1%, however production in total has yet to reach its pre-pandemic level from February.

The Markets (as of market close December 4, 2020)

November closed on a sour note as investors took profits from stocks last Monday. The Russell 2000, which gained more than 18.0% in November, fell nearly 2.0% on the day. The Global Dow dropped 1.7%, followed by the Dow (-0.9%), the S&P 500 (-0.5%), and the Nasdaq (-0.1%). Treasuries and the dollar advanced, while crude oil prices fell. Health care and information technology were the only market sectors to post gains. Energy, financials, industrials, and utilities each dropped at least 1%.

Stocks rebounded last Tuesday to start December off with a bang. Renewed hope for a stimulus deal and the growing potential of a COVID-19 virus vaccine added to investors’ confidence. The S&P 500 and the Nasdaq reached record highs by the close of trading. Communication services, financials, real estate, and information technology led the sectors. The dollar slid to its lowest level in more than two-years. Crude oil prices fell, but Treasury yields advanced. Among the benchmark indexes, the Global Dow added 1.4%, followed by the Nasdaq (1.3%), the S&P 500 (1.1%), the Russell 2000 (0.9%), and the Dow (0.6%).

The S&P 500 hit another record last Wednesday as stocks closed generally higher for the second consecutive day. The Global Dow continued to surge, climbing 1.5%, followed by the Dow (0.2%), the S&P 500 (0.2%), and the Russell 2000 (0.1%). Only the Nasdaq ended the day slightly in the red, falling a mere 0.1%. Treasury yields and crude oil prices rose, while the dollar sank. Energy led the sectors, advancing over 3.0%. Financials and communication services each gained more than 1.0% on the day.

Stocks were mixed last Thursday as energy, industrials, and real estate advanced, while materials and utilities sunk. The Global Dow climbed 0.7%, the Russell 2000 gained 0.6%, the Dow and the Nasdaq edged up 0.3% and 0.2%, respectively. The S&P 500 declined 0.1%. Treasury yields and the dollar declined, while crude oil prices rose nearly 1.0%.

Equities closed the week as they started, posting impressive gains by the close of trading last Friday. The Russell 2000 advanced 2.3%, the Global Dow climbed 1.1%, the S&P 500 gained 0.9%, the Dow rose 0.8%, and the Nasdaq added 0.7%. Treasury yields surged, reaching their highest level in nine months. Crude oil prices climbed 0.9% but the dollar fell. Among the sectors, energy gained more than 5.0%, offsetting a drop in consumer stocks.

Stocks climbed higher for the week, as investors seem to be gambling on fiscal stimulus in the near term and a virus vaccine within the next several months. The Dow closed well above the 30,000 mark, setting a new high in the process. The S&P 500 and the Nasdaq also set new record highs last week. The Russell 2000 and the Global Dow each advanced more than 2.0% on the week. The Nasdaq is nearly 40.0% higher than its 2019 year-end closing value, and both the S&P 500 and the Russell 2000 are more than 13.0% ahead of their respective year-end marks.

Crude oil prices advanced again last week, closing at $46.04 per barrel by late Friday afternoon, up from the prior week’s price of $45.53 per barrel. The price of gold (COMEX) rebounded last week, closing at $1,840.40, up from the prior week’s price of $1,781.90. The national average retail price for regular gasoline was $2.120 per gallon on November 30, $0.018 higher than the prior week’s price but $0.455 less than a year ago.

Stock Market Indexes

Market/Index	2019 Close	Prior Week	As of 12/4	Weekly Change	YTD Change
DJIA	28,538.44	29,910.37	30,218.26	1.03%	5.89%
Nasdaq	8,972.60	12,205.85	12,464.23	2.12%	38.91%
S&P 500	3,230.78	3,638.35	3,699.12	1.67%	14.50%
Russell 2000	1,668.47	1,855.27	1,892.45	2.00%	13.42%
Global Dow	3,251.24	3,406.25	3,489.98	2.46%	7.34%
Fed. Funds target rate	1.50%-1.75%	0.00%-0.25%	0.00%-0.25%	0 bps	-150 bps
10-year Treasuries	1.91%	0.84%	0.96%	12 bps	-95 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Last Week’s Economic News

• Employment in November increased by 245,000 following monthly advances of 610,000 and 711,000 in October and September, respectively. Notable job gains occurred over the month in transportation and warehousing, professional and business services, and health care. Employment declined in government and retail trade. In November, the unemployment rate edged down to 6.7%. The rate is down by 8.0 percentage points from its recent high in April but is 3.2 percentage points higher than it was in February. The number of unemployed persons, at 10.7 million, continued to trend down in November but is 4.9 million higher than in February. The labor force participation rate edged down to 61.5% in November (61.7% in October), 1.9 percentage points below its February level. The employment-population ratio, at 57.3%, changed little over the month but is 3.8 percentage points lower than in February. In November, 21.8% of employed persons teleworked because of the coronavirus pandemic, up from 21.2% in October. Last month, 14.8 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic — little changed from October. The average workweek remained unchanged at 34.8 hours in November. Average hourly earnings increased by $0.09 to $29.58 and are up 4.4% from a year ago.
• The pace of growth in the manufacturing sector slowed in November, according to the latest Manufacturing ISM® Report On Business®. The November manufacturing purchasing managers’ index registered 57.5%, down 1.8 percentage points from the October reading. New orders, production, employment, inventories, and imports declined in November. The backlog of orders, deliveries, and export orders increased last month.
• Like the manufacturing sector, services grew in November, but at a slower pace than in October. The services purchasing managers’ index registered 55.9%, 0.7 percentage point lower than the October reading. Business activity fell 3.2%, new orders dropped 1.6%, and inventories decreased 3.8%. On the positive side, employment increased 1.4% and prices advanced 2.2%.
• According to the latest information from the Census Bureau, the goods and services trade deficit was $63.1 billion in October, up 1.7% from the prior month’s total. October exports increased 2.2% to $182.0 billion. Imports in October were $245.1 billion, 2.1% ahead of September imports. Year to date, the goods, and services deficit increased $46.6 billion, or 9.5%, from the same period in 2019. Exports decreased 16.4%, while imports decreased 11.5%. For the third quarter, trade surpluses (in billions of dollars) were with South and Central America ($12.2), OPEC ($7.4), Hong Kong ($5.1), Brazil ($4.9), the United Kingdom ($4.3), Singapore ($3.2), Saudi Arabia ($2.6), and Canada ($2.0). Trade deficits (in billions of dollars) were recorded with China ($74.6), Mexico ($34.2), the European Union ($31.1), Germany ($14.1), Japan ($12.8), India ($8.5), Taiwan ($7.3), Italy ($6.9), France ($5.9), and South Korea ($4.3).
• For the week ended November 28, there were 712,000 new claims for unemployment insurance, a decrease of 75,000 from the previous week’s level, which was revised up by 9,000. According to the Department of Labor, the advance rate for insured unemployment claims was 3.8% for the week ended November 21, a decrease of 0.4 percentage point from the prior week’s rate. For comparison, during the same period last year, there were 206,000 initial claims for unemployment insurance, and the insured unemployment claims rate was 1.2%. The advance number of those receiving unemployment insurance benefits during the week ended November 21 was 5,520,000, a decrease of 569,000 from the prior week’s level, which was revised up by 18,000. The highest insured unemployment rates in the week ended November 14 were in the Virgin Islands (7.9%), California (7.3%), Hawaii (7.1%), Nevada (6.7%), Alaska (6.4%), and Massachusetts (6.0%). The largest increases in initial claims for the week ended November 21 were in Illinois (+18,796), Michigan (+17,285), Washington (+13,499), Georgia (+9,462), and California (+9,361), while the largest decreases were in Louisiana (-33,573), Massachusetts (-22,572), New Jersey (-783), Idaho (-328), and the District of Columbia (-255).

Eye on the Week Ahead

The final estimate of gross domestic product for the third quarter is released this week. The second estimate projected that the economy expanded at a rate of 33.1% in the third quarter — a figure that’s not expected to change much in the final estimate. Also out this week is the latest report on the Consumer Price Index for November. The CPI was unchanged in October and has increased by a mere 1.2% for the year, as inflationary pressures remain muted.

The Markets (as of market close November 30, 2020)

Despite a downturn on the last day of the month, stocks rebounded impressively in November from a moribund performance in October. Several of the benchmark indexes reached record highs during November as investors shifted slightly from tech stocks to shares influenced by economic cycles.

While the presidential election, COVID-19, and additional fiscal stimulus dominated the news throughout the month, stocks seemed immune. Instead, investors pinned their hopes on the development of a virus vaccine and a quick economic recovery.

Gross domestic product rebounded in the third quarter and job growth continued. Personal income and consumer spending continued to climb. Inflation remained muted and below the Federal Reserve’s 2.0% target. Sales of existing homes advanced, while new home sales lagged.

The Dow enjoyed its best month since 1987, and the small caps of the Russell 2000 surged ahead by nearly 20.0%. In fact, each of the benchmark indexes posted double-digit monthly gains.

Among market sectors, energy, financials, industrials, and materials surged. Communication services and information technology posted moderate gains, and utilities fell.

Year to date, each of the indexes listed here is ahead of its respective 2019 closing value. The Nasdaq is 35.96% ahead of last year’s pace, followed by the S&P 500, the Russell 2000, the Dow, and the Global Dow.

By the close of trading on November 30, the price of crude oil (CL=F) was $45.11 per barrel, well above its October 30 price of $35.61 per barrel. The national average retail regular price for gasoline was $2.102 on November 23, $0.043 lower than the October 26 selling price, and $0.477 less than a year ago. The price of gold sank last month, closing at $1,779.00 on November 30, down from its October 30 closing price of $1,878.00.

Stock Market Indexes

Market/Index	2019 Close	Prior Month	As of November 30	Monthly Change	YTD Change
DJIA	28,538.44	26,501.60	29,638.64	11.84%	3.86%
Nasdaq	8,972.60	10,911.59	12,198.74	11.80%	35.96%
S&P 500	3,230.78	3,269.96	3,621.63	10.75%	12.10%
Russell 2000	1,668.47	1,538.48	1,819.82	18.29%	9.07%
Global Dow	3,251.24	2,886.59	3,348.50	16.00%	2.99%
Fed. Funds target rate	1.50%-1.75%	0.00%-0.25%	0.00%-0.25%	0 bps	-150 bps
10-year Treasuries	1.91%	0.86%	0.84%	-2 bps	-107 bps

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments.

Latest Economic Reports

• Employment: Employment increased by 638,000 in October after adding 661,000 new jobs in September. Employment has increased for six consecutive months, but is below its February level by 10.1 million, or 5.5%. Notable job gains occurred in leisure and hospitality, professional and business services, retail trade, and construction. Employment in government declined. These improvements in the labor market reflected the continued resumption of economic activity that had been curtailed due to the COVID-19 pandemic and efforts to contain it. The unemployment rate declined by 1.0 percentage point to 6.9%, and the number of unemployed persons fell by 1.5 million to 11.1 million. Both measures have declined for six consecutive months but were higher than in February by 3.5% and 5.8 million, respectively. The number of persons not in the labor force who currently want a job, at 6.7 million in October, is 1.7 million higher than in February. In October, 21.2% of employed persons teleworked because of the COVID-19 pandemic, down from 22.7% in September. Also, 15.1 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic. This figure is down from 19.4 million in September. About 3.6 million persons not in the labor force in October were prevented from looking for work due to the pandemic. This is down from 4.5 million in September. Average hourly earnings in October rose by $0.04 to $29.50. Average hourly earnings increased by 4.5% over the last 12 months ended in October. The average work week was unchanged from September at 34.8 hours in October. The labor participation rate increased 0.3 percentage point to 61.7%. The employment-population ratio increased 0.8 percentage point to 57.4%, but is 3.7 percentage points lower than in February.
• Claims for unemployment insurance continued to drop in November. According to the latest weekly totals, as of November 14 there were 6,071,000 workers receiving unemployment insurance, down from the October 17 total of 7,756,000. The insured unemployment rate was 4.1% (5.3% a month earlier). The highest insured unemployment rates in the week ended November 7 were in California (7.9%), Hawaii (7.1%), Nevada (6.9%), the Virgin Islands (6.9%), Alaska (6.3%), Massachusetts (6.1%), Illinois (5.9%), Georgia (5.8%), District of Columbia (5.6%), and New Mexico (5.5%).
• FOMC/interest rates: The Federal Open Market Committee (FOMC) met in early November. In its official statement following that meeting, the FOMC noted that while the COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world, economic activity and employment have continued to recover but remain well below their levels at the beginning of the year. The ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. The Committee expects to maintain an accommodative monetary policy stance until maximum employment and 2.0% inflation are achieved over the longer run. In lieu thereof, the FOMC decided to keep the target range for the federal funds rate at 0.0% to 0.25%.
• GDP/budget: In contrast to the second-quarter gross domestic product, which fell 31.4%, the second estimate for the third quarter shows the economy advanced at an annual rate of 33.1%, unchanged from the first estimate. The reversal in economic growth reflects the ongoing efforts to reopen businesses and resume activities that were postponed or restricted due to the COVID-19 pandemic. Consumer spending, as measured by personal consumption expenditures, increased 40.6% in the third quarter, in contrast to a 33.2% decline in the second quarter. Nonresidential (business) investment vaulted 21.8% (-27.2% in the second quarter); residential investment soared 62.3% after falling 35.6% in the prior quarter. Exports advanced 60.5% (-64.4% in the second quarter), and imports increased 93.1% (-54.1% in the second quarter). Federal nondefense government expenditures decreased 18.1% in the third quarter as federal stimulus payments and aid lessened.
• October marked the first month of fiscal year 2021. The monthly Treasury budget deficit for October was $284.1 billion, up 111% from the October 2019 deficit. October government outlays, at $521.8 billion, were 37% higher than a year earlier, while government receipts for the month fell 3% to $237.7 billion. Compared to October 2019, payments for income security increased by 135%, Medicare outlays rose by 72%, and veterans benefits and services payments advanced 69%.
• Inflation/consumer spending: According to the Personal Income and Outlays report for October, personal income and disposable personal income decreased 0.7% and 0.8%, respectively, after each increased 0.7% in September. Consumer spending increased for the fifth consecutive month in October, climbing 0.5% following a 1.2% advance in September. Inflation remained somewhat muted as consumer prices were unchanged in October after increasing 0.2% in September. Consumer prices have increased by a mere 1.2% over the last 12 months.
• The Consumer Price Index was unchanged in October after climbing 0.2% in September. Over the last 12 months ended in October, consumer prices are up 1.2%. Component indexes were mixed, with many offsetting increases and decreases. The food index advanced 0.2%, energy inched up 0.1%, and new vehicles moved up 0.4%. Apparel fell 1.2%, used cars and trucks dropped 0.1%, and medical care commodities fell 0.8%.
• Prices that producers receive for goods and services, as measured by the Producer Price Index, rose 0.3% in October after climbing 0.4% in September. Producer prices increased 0.5% for the 12 months ended in October, the largest advance since moving up 1.1% for the 12 months ended in February. In October, nearly 60% of the rise in prices was attributable to a 0.5% increase in goods. Prices for services also moved up 0.2%. Prices less foods, energy, and trade services advanced 0.2% in October, the sixth consecutive monthly increase. For the 12 months ended in October, producer prices less foods, energy, and trade services rose 0.8%, the largest advance since moving up 1.0% for the 12 months ended in March.
• Housing: The housing sector returned mixed results in October. Sales of existing homes advanced for the fifth consecutive month, climbing 4.3% after increasing 9.4% in September. Over the 12 months ended in October, existing home sales are up nearly 26.6%. The median existing-home price was $313,000 in October ($311,800 in September). Unsold inventory of existing homes represents a 2.5-month supply at the current sales pace, a record low. Sales of existing single-family homes increased 4.1% in October following a 9.7% jump in September. Over the last 12 months, sales of existing single-family homes are up 25.9%. The median existing single-family home price was $317,700 in October, up from $316,200 in September.
• While existing home sales continued to increase, new home sales fell 0.3% in October for the second consecutive month, after decreasing 3.5% in September. The median sales price of new houses sold in October was $330,600 ($326,800 in September). The October average sales price was $386,200 ($405,400 in September). The inventory of new single-family homes for sale in October represents a supply of 3.3 months at the current sales pace, down from the September estimate of 3.6 months.
• Manufacturing: Total industrial production rose 1.1% in October after falling 0.6% in September. Although industrial production has recovered most of its February to April decline, output in October was still 5.6% below its pre-pandemic February level. After edging up 0.1% in September, manufacturing output increased 1.0% in October. The output of utilities rose 3.9%, while the output at mines declined 0.6% to a level that was 14.4% below its year-earlier reading. Most major industries reversed course from September, posting increases in October. Consumer goods rose 0.8%. Production of business equipment increased 0.6%. Production of nonindustrial supplies advanced 2.0% in October after falling 0.2% in September. Overall, the level of total industrial production was 5.3% lower in October than it was a year earlier.
• For the sixth consecutive month, new orders for durable goods increased in October, climbing 1.3% following a 1.9% jump in September. Despite the trend of monthly increases, new orders for manufactured durable goods were 9.1% lower than a year ago. Excluding transportation, new orders increased 1.3% in October. Excluding defense, new orders increased 0.2%. Defense and nondefense aircraft and parts led the October increase in new orders, advancing 79.1% and 38.8%, respectively. Nondefense new orders for capital goods fell 0.2% in October after increasing 11.5% in September.
• Imports and exports: Prices for U.S. imports edged down 0.1% in October following a 0.2% increase in September. The October decline was driven by lower fuel prices (-1.9%), which more than offset higher nonfuel prices (+0.1%). Export prices increased 0.2% in October, continuing the upward trend of the four previous months. In October, the advance was driven by higher agricultural export prices (+3.4%); prices for nonagricultural exports were unchanged. Even with the recent increases, export prices declined 1.6% for the year ended in October.
• The international trade in goods deficit was $80.3 billion in October, up $3.7 billion, or 1.2% up from September. Exports of goods were $126.0 billion in October, $3.4 billion, or 2.8%, more than in September. Imports of goods were $206.3 billion in October, $4.4 billion, or 2.2%, more than in September. Exports of industrial supplies, which increased 13.6% in September, fell -4.4% in October. Exports of consumer goods climbed 6.1% in October after advancing 1.3% the prior month. Imports of industrial supplies rose 3.1% in October after declining 3.5% in September. Imports of automotive vehicles rose 3.2% in October after vaulting up 11.3% in September.
• The latest information on international trade in goods and services, out October 6, is for August and shows that the goods and services trade deficit was $67.1 billion, an increase of nearly $4.0 billion, or 5.9%, over the July deficit. August exports were $171.9 billion, or 2.2% more than July exports. August imports were $239.0 billion, or 3.2% more than July imports. Year to date, the goods and services deficit increased $22.6 billion, or 5.7%, from the same period in 2019. Exports decreased $296.1 billion, or 17.6%. Imports fell $273.5 billion, or 13.1%.
• International markets: China’s factory production expanded at its fastest rate in three years, a further sign of the country’s economic recovery from the pandemic. Global markets also enjoyed a solid November, with European shares climbing for four consecutive weeks, buoyed by positive vaccine developments. The STOXX Europe 600 Index and Germany’s DAX Performance Index each rose nearly 13% on the month. These gains came despite several European nations, including Germany and the United Kingdom, tightening COVID-19 restrictions.
• Consumer confidence: The Conference Board Consumer Confidence Index® declined in November for the second consecutive month. The index stands at 96.1, down from 101.4 in October. The Present Situation Index, based on consumers’ assessment of current business and labor market conditions, decreased slightly from 106.2 to 105.9. The Expectations Index, which is based on consumers’ short-term outlook for income, business, and labor market conditions, declined from 98.2 in October to 89.5 in November.

Eye on the Month Ahead

The last month of the year brings to a close a most tumultuous 2020, as the country and the world continue to recover from the effects of the COVID-19 virus. One or more vaccines should be nearing availability in the early part of 2021. The job market should trend upward, unemployment should wane, industrial production should increase, and the economy should stabilize.