Hope all is well with you and your family.  Markets appear to be back on track. After posting mixed results in the previous week, the major indexes resumed the upward momentum seen since the start of November. Weekly gains totaled 2% to 3%, with most of the increase coming early in the holiday-shortened week amid positive news regarding coronavirus vaccines.  Here's what you need to know from the week that was, broken down by quotes from Tom Cruise movies.

Just the shameless pursuit of immediate gratification. What a capitalist. -Joel Goodson
 
Market made record highs all around. The S&P 500 and the Dow added to the records they had set earlier in November, while the NASDAQ topped a previous all-time high that it had recorded in early September. The Dow topped 30,000 points for the first time on Tuesday but slipped below that level by Friday’s close; the NASDAQ eclipsed 12,000, a threshold it had briefly reached in early September.

You can't handle the truth! - Colonel Nathan R. Jessup
 
Despite the market optimism the truth is the economic recovery is losing steam as we experienced a jobs setback. The number of Americans filing for unemployment benefits rose to the highest level in five weeks—an indication that the labor market’s recent recovery could be stalling. The latest weekly report shows about 778,000 people filed for first-time benefits, marking the second consecutive weekly increase. It was the first instance of back-to-back weekly increases since late July.

"That's right, Ice…Man, I am dangerous." Maverick

Consumer confidence is shaken by the dangers surrounding us.  The latest monthly numbers on U.S. consumer confidence indicate that spiking coronavirus cases may have reversed a recent uptick in optimism. The Conference Board cited the pandemic as it reported that its confidence index fell to 96.1 in November—the lowest level since August, and down from a revised figure of 101.4 in October.
 
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Hope all is well with you and your family.  Here is this week's market recap.  The equity markets continue to perform a balancing act between incoming positive vaccine news and ever-growing economic restrictions aimed at curbing the recent spike in virus cases and hospitalizations. We received a series of positive vaccine announcements, first from Pfizer on 11/9, then from Moderna last Monday, and then from Pfizer again last Wednesday on the final results of its late-stage trial. This news propelled the S&P 500 to a new all-time high, before the rally fizzled later in the week on deteriorating coronavirus trends and weak jobs data. The near-term outlook is also worsening because of the renewed restrictions on activity.  The market is attempting to balance this weakened near-term outlook against an improving medium- to long-term outlook due to the vaccine developments.  
 
Market Rotation Continues 
The rotation out of the technology sector and into more cyclical stocks continued, as the vaccine developments improved investor sentiment and confidence about next year's outlook. A central theme in equity markets over the last two weeks has been the so-called rotation, or change in leadership across asset classes, sectors and investment styles.  Leaders and laggards trade places – Technology stocks, growth-style investments, and stocks that benefit from the "stay-at-home" trends not only held up better during the pandemic-induced bear market, but have also led the market since the March bottom. However, the recent vaccine developments acted as a catalyst for the recent shift in the investment landscape, as confidence in the economic rebound strengthened. Cyclical sectors, like energy and financials, which have been negatively impacted by the pandemic and are more sensitive to the reopening of the economy, outperformed, while sectors that have benefited from the pandemic, like technology and communication services, lagged. A similar rotation occurred across asset classes, with small-cap and international investments outpacing U.S. large-cap investments. Investment styles were affected too, with value (dividend income) outperforming growth (capital appreciation). 
 
We are coming upon the end of 2020, a year many of us will be glad to turn the calendar on.  We have all likely seen the Charlie Brown Thanksgiving special at some point in our lives and no matter how we are choosing to gather on Thursday I think it's wisdom rings especially true this year.  

​Hope all is well with you and your family.  The S&P 500 closed at a new record high and global equities posted a second week of gains following news of progress in developing a COVID-19 vaccine. Stocks surged on Monday after Pfizer and BioNTech announced that their vaccine had 90% effectiveness in their large study, triggering a wave of hope and optimism that a medical solution will address the health crisis and accelerate the economic recovery. Cyclical sectors that have been negatively impacted by the pandemic and are more sensitive to the reopening of the economy outperformed last week, while sectors that have benefited from the pandemic underperformed.

​We Have A Vaccine
A vaccine set a healthy foundation for Monday's rally, but it won't immunize the market from volatility. Gains were solid but not steady last week, with the S&P 500 rising 2.2% in see-saw fashion. The improved prospects for a vaccine establish a bit of a safety net under the market, but they won't prevent spells of weakness.

Second Wave Of The Virus?
The spike in new COVID-19 cases and hospitalizations will likely be the key instigator of market swings in the weeks ahead. The strong rally in U.S. stocks since midsummer has been driven by progress in reopening the economy. The surge in infections stunts that progress, with several areas, including Chicago and New York, imposing tighter restrictions to mitigate the spread. We'll probably NOT return to the lockdown measures of earlier this year, but the pace of the rebound in economic activity is likely to stall somewhat in the coming months. Market sentiment will oscillate between vaccine optimism and near-term infection and reopening concerns.   

Road To Recovery
The decade has not had the kind of start many expected or hoped for. However, the latest data signals the pillars of the recovery remain intact. Initial jobless claims last week fell to 709,000, the fourth consecutive weekly decline  and the lowest reading since the pandemic began. This signals the continued healing of the labor market, which  will be one of the most influential drivers of the sustained economic recovery.  We could see the pace of improvement in hiring stall somewhat due to the recent surge in virus cases, but expect unemployment to decline further in 2021, supporting household consumption and an enduring economic expansion.  More positive news, third-quarter corporate earnings came in ahead of expectations, with more than 80% of companies beating estimates by an average of 17%.  There are signs that better days are coming.
 
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​Hope all is well with you and your family. I wanted to give a brief update.  A week after dropping around 6%, the major U.S. stock indexes recovered that lost ground and then some. The S&P 500 and the Dow both jumped around 7% while the NASDAQ surged more than 9%. The economy and corporate earnings continued to show signs of improvement helping to spark a rally that came as coronavirus cases continued to surge and as election results continued to be counted.

Walkin' Back to Georgia
This weekend, Joe Biden was declared the winner although the President has yet to concede.  The more important news for markets is in Georgia. In the words of the Jim Croce song: "Georgia; she's the only one who knows how it feels when you lose a dream and how it feels when you dream alone." Georgia has long been a Republican stronghold but with rapidly changing demographics Republicans may lose the dream of holding the senate.  The state will be the site of two runoffs on Jan. 5 to settle which party will control the Senate. The post election rally can be attributed in part to investors’ hopes that the likelihood of a continuing partisan divide over control of the White House, the Senate, and the House.  The hope was that a divided Congress might keep the favorable tax and regulatory environment intact.   That result seems less certain today.  

I am here to help at any time. If you would like to schedule a phone/web conference appointment, with Stephen Caruso, Financial Advisor; CLICK HERE. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment.

The Dow Jones Industrial Average jumped 700 points, or 2.6%. The S&P 500 traded 3.1% higher. The tech-heavy Nasdaq Composite popped 4.1%. 

The market is higher as the blue wave that was forecasted did not materialize.   However,  proceed with caution there is volatility ahead.  If you were thinking of reducing market risk now might not be a bad time to do so.   My feeling is the worst case scenario for short term market volatility has played out.  The President had a significant lead yesterday evening.  The lead was big enough for him to feel comfortable claiming victory.  However, his claims don't seem to be supported by the vote count, as he is currently trailing in Michigan, Nevada and Wisconsin.  If Biden takes those 3 states he will have won the election regardless of Pennsylvania. What that sets up for is a protracted fight and recounts in the most closely contested states.  I don't think today's rally is properly considering that scenario.  The next few weeks will be very volatile,  I am NOT advising to get out of stocks.  We will get through this election cycle and the market will be fine.  What I would suggest for those who might be nervous about the weeks ahead.  Take a look at your retirement account (401k, 457, TSP, IRA,etc.) and if you have had a large increase  then take 5 to 10 percent of it and move it to the sidelines in something like a stable value fund or short term government bonds.    
 
I am here to help at any time. If you would like to schedule a phone/web conference appointment, I have included a link to my calendar below and you can self schedule. For those of you who prefer an in person meeting I am now scheduling in person meetings as well, please email me if you would prefer an in person appointment.
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