Week 47 in Brief
How did the major indices perform?
US stocks closed lower on Friday as rising coronavirus cases and a decision to allow some emergency Federal Reserve programs to expire cast doubt on a swift economic recovery, despite some progress in vaccine development.
- On Friday, the Dow Jones Industrial Average fell 219.75 points, or 0.8%, to close at 29,263.48; the S&P 500 dropped 24.33 points, or 0.7%, to finish at 3,557.54; while the Nasdaq Composite reversed early gains to close at 11,854.97, down 49.74 points or 0.4%.
- For the week, the Dow lost 0.7%; the S&P 500 fell 0.8%; the Nasdaq gained 0.2%; while the small-cap Russell 2000 index rose 2.4%.
What drove the market?
- This week, investors reverted to old trends of buying large-capitalization, technology-related stocks on the back of fresh coronavirus restrictions, before an apparent rift emerged between the Treasury Department and the Federal Reserve on the expiration of some of the Feds fiscal emergency programs.
- On Thursday, Treasury Secretary Steven Mnuchin said he wouldn’t approve the extension of several emergency loan programs set up with the Fed during the worst days earlier this year of the financial turmoil created by the pandemic.
- The Fed responded that it “would prefer that the full suite of emergency facilities established during the coronavirus pandemic continue to serve their important role as a backstop for our still-strained and vulnerable economy;”
- Mnuchin said he is legally obliged to return the unused funds to Congress, which he urged to help fund small businesses and workers.
- Pfizer announced it would file for approval from U.S. regulators for emergency use of the vaccine it’s developed with BioNTech that has proven 95% effective in a clinical trial. Moderna Inc. earlier this week said its vaccine candidate was more than 94% effective in a trial.
Stocks in focus
- Gilead Sciences shares dropped 0.9% after a World Health Organization panel recommended against doctors using the drug remdesivir to treat coronavirus patients. Shares closed trading at $60.11.
- Workday shares lost 9.3%, closing at $209.40 after the cloud-software company delivered strong revenue and continued earnings growth in its third-quarter results.
- Nike shares gained 0.8% after the athletic apparel and accessories company said it was raising its quarterly dividend by 12%. Shares closed at $132.98.
- Butterfly Network said Friday it had agreed to merge with special purpose acquisition corporation Longview Acquisition Corp. in a deal with an enterprise value of $1.5 billion. Longview shares closed 26.8% higher, at $ 12.50.
How did the European markets perform?
- European stocks ended higher on Friday as rising hopes around vaccines offset concerns over rising Covid-19 cases and uncertainty about a fiscal stimulus in the U.S.
- The pan European Stoxx 600 advanced 0.52%. The U.K.’s FTSE 100 moved up 0.27%, Germany’s DAX and France’s CAC 40 both ended higher by 0.39%, and Switzerland’s SMI edged up 0.05%.
- In economic news, Eurozone’s consumer confidence weakened for a second consecutive month in November to reach its lowest level in six months as major economies, Germany and France returned to lockdown amid a resurgence in the coronavirus pandemic.
How did Asian markets perform?
- In China, the Shanghai Composite Index booked a 0.4% gain and advanced 2% for the week, while the CSI 300 finished the session 0.3% higher and climbed 1.8% on the week.
- Japan’s Nikkei 225 ended with a 0.4% loss but marked a 0.6% weekly gain.
Commodities and other assets
- Oil futures climbed on Friday, with prices scoring a third weekly gain in a row. WTI for December delivery settled at $42.15 a barrel on the New York Mercantile Exchange, up 41 cents, or 1% while January Brent crude, added 76 cents, or 1.7%, at $44.96 a barrel on ICE Futures Europe. Both contracts gained 5% for the week.
- Gold futures rose 0.6%, or $10.90, to settle at $1,872.40 an ounce, but were higher for the week.
- Meanwhile, the yield on the 10-year Treasury note was virtually unchanged at 0.833% as investors shunned riskier assets. Yields and prices move in opposite directions.
- The dollar rose against major currencies such as the euro and yen, with traders consolidating positions amid competing forces that pull the currency in different directions.
- In afternoon trading, the ICE USD index was flat at 92.369 in a quiet day for currency markets, but dropped down 0.5% on the week, as currency market sentiment was buoyed by U.S. President-elect Joe Biden’s victory and the progress towards a COVID-19 vaccine.
- The Japanese yen was down around 0.1% while the Euro was flat against the dollar, at $1.18725 on track for a small weekly gain.
- Stocks will continue to focus on both the growing virus outbreak and the potential for a rebound next year, once vaccines are distributed.
- The coming holiday week could continue to be a period of consolidation for the stock market, as restrictions impact the economy during the important Thanksgiving holiday period.
- Markets are watching for any potential news on a fiscal stimulus package from Congress.
- Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.