Week 50 in Brief
How did the major indices perform?
U.S. stocks closed slightly lower on Friday, in a week that saw unsteady progress towards another fiscal stimulus package in Washington and unsuccessful Brexit talks in Europe, despite progress in vaccine rollouts and some of the biggest IPOs of the year.
- On Friday, the Dow Jones Industrial Average finished 47.11 points, or 0.2%, higher, at 30,046.37; the S&P 500 the S&P 500 index retreated 4.65 points to reach 3,663.46, a drop of 0.1%; and the Nasdaq Composite lost 27.94 points, 0.2%, to close at 12,377.87.
- For the week, the Dow booked a 0.6% decline, the S&P 500 index fell 1%, and the Nasdaq Composite lost 0.7%. The small-cap Russell 2000 was nearly 1% higher for the week, however.
What drove the markets?
- The market continues to contend with a series of potentially disappointing outcomes that are disrupting the bullish mood on Wall Street.
- A bipartisan $908 billion pandemic relief package in Washington remained limbo, even as weekly economic data on Thursday showed a sharp rise in jobless benefit claims, likely due to an uncontrolled second wave of the COVID-19 pandemic in the U.S.
- The Senate passed a one-week spending bill to keep the government open, but Senate Republicans are still pushing for a narrower coronavirus relief bill, with differences centered on the state and local government aid, and liability protection for businesses.
- The U.S. Food and Drug Administration said it plans to complete and issue an emergency use authorization to BioNTech and Pfizer Inc.’s experimental COVID-19 vaccine after an advisory panel recommended its approval on Thursday. Cases and deaths from Covid-19 continue to rise averaging 211,127 cases a day in the US in the past week.
Economic Data & Policy
- The US producer-price index climbed 0.1% in November but reflected the smallest increase in seven months, underscoring the lack of inflationary pressure in an economy still struggling to emerge from the ravages of the coronavirus pandemic. But some market participants said that other measures of inflation, including the Commodity Research Bureau Index, or CRB, are pointing to higher prices.
- A reading of the consumer sentiment perked up in early December, as Democrats cheered the outcome of the November election.
Stocks in focus
- Pfizer Inc. said Friday its board had raised its quarterly cash dividend to 39 cents a share from 38 cents in the year-earlier period. The new dividend will be payable March 5 to shareholders of record as of Jan. 29. Shares were down 0.8% even amid the FDA news.
- Airbnb shares have been rising since the listing on the Nasdaq on Thursday. Shares more than doubled when the company started trading at a price that valued the company at close to $100bn. On Friday shares seesawed all day, finally closing 3.8% lower at $ 139.25. The week saw many IPOs.
- Shares of DoorDash also shot up 80% when they began trading for the first time on Wednesday afternoon. The shares were priced at $102 each late Tuesday but rose sharply to $185 when they began trading on Wednesday. The shares closed trading at $175 on Friday.
- Tesla shares lost 2.7% after a downgrade and closed at $609.99 just a week before the company is added to the S&P 500 index.
- Shares of Walt Disney gained nearly 14% and clinched another record after the entertainment company rolled out a streaming strategy.
How did the European markets perform?
- European markets closed lower Friday with shares in Germany leading the region as investors monitored stalling U.S. fiscal stimulus talks and the rapidly approaching deadline for Brexit negotiations.
- The pan-European Stoxx 600 provisionally closed down 0.7%, with telecoms shedding 2.9% to lead losses as almost all sectors and major bourses slid into negative territory.
- In Germany, the DAX is down 1.36% while London’s FTSE 100 is off 0.80% and France’s CAC 40 is lower by 0.76%.
- U.K. Prime Minister Boris Johnson said the country needs to brace for the likelihood that a post-Brexit trade deal with the European Union won’t happen. European Commission President Ursula von der Leyen echoed Johnson’s comments Friday, telling EU leaders there was a “higher probability for no-deal than a deal.” Sterling fell 0.6% versus the dollar, trading at around $1.32.
- A deal must be struck before the end of 2020 or the U.K.’s current commercial and trading ties with the EU will expire on Jan 1 without an agreement in place, an outcome that could roil global markets anew.
How did Asian markets perform?
- Asian markets finished mixed as of the most recent closing prices.
- Japan’s Nikkei 225 closed 0.4% lower on the day, while South Korea’s Kospi index closed up 0.9%.
- Hong Kong’s Hang Seng index closed 0.4% higher on Friday, while China’s Shanghai Composite Index finished the day off 0.8% and closed down over 1%.
Commodities and other assets
- Oil managed a weekly gain as an impasse in Washington over pandemic relief dimmed chances of an imminent boost to demand. WTI for January delivery lost 21 cents to settle at $46.57 a barrel while Brent for February settlement declined 28 cents to end the session at $49.97 a barrel. The contract rose 1.5% this week.
- Gold prices were rising as investors edged away from risk assets. Gold for February delivery rose $6.20, or 0.3%, to settle at $1,843.60 an ounce.
- The 10-year Treasury note was down nearly 2 basis points to yield 0.889%, set for a weekly slide. Bond prices rise as yields fall.
- The USD was up 0.3% against a basket of major currencies, trading at 91.036 and moving away from the two-and-a-half-year low of 90.471 it reached a week ago.
- The pressure was eased on the dollar on Friday as the currency was set to end three straight weeks of declines, while sterling suffered losses amid fears a post-Brexit trade deal might not be reached before the end of 2020. GBP was down about 0.8% at $1.3185 before a weekend of brinkmanship.
- EUR was also retreating against USD, losing 0.23% at $1.2115 after Thursday’s gains, when the European Central Bank announced a new round of stimulus in line with market expectations. EU leaders also reached a compromise over a pandemic aid package.
- The week ahead is likely to be marred with volatility as some investors trade on vaccine hopes while others trade on the uncertainty of ever-rising daily coronavirus cases and the stimulus bill standoff in Congress.
- Watch out for our Monday Weekly Market Outlook that provides insights on what’s coming up that week.