Market Update - November 21, 2020

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.