Tuesday, December 1, 2020
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A year’s worth of returns in one month.
The final month of 2020 has arrived.
But for investors, it will be hard to top the performance and enthusiasm of the year’s second-to-last month.
Because during a year full of events that investors and the public aren’t likely to soon forget, the returns seen across markets, asset classes, styles, and individual stocks in November will likely stand alone as the year’s highlight.
One of the most popular cliches of the COVID pandemic has been that a decade worth of change is happening in one year. For investors in November 2020, returns across major asset classes were those you’d expect to see over a year happening in just one month. And then some.
When the closing bell rang on Monday, the Dow (^DJI) had gained 11.8% for the month, its best November performance since 1928 and the best overall month for the blue chip index since January 1987.
And the superlatives continue.
Industrials (XLI) and Financials (XLF) both enjoyed their best month since April 2009 as the rotation trade favoring cyclical sectors over growth sectors endured through November. The XLE ETF (XLE) that tracks the energy sector had its second-best month ever.
These gains across the universe of investable assets came during a month in which clarity emerged on just about every major worry still facing investors in 2020.
The U.S. presidential election has been decided, with former Vice President Joe Biden now the President-elect. Progress on COVID-19 vaccines from Pfizer (PFE) and BioNTech (BNTX) as well as Moderna (MRNA) now offer real light at the end of this pandemic tunnel.
Since the market bottomed on March 23rd, investors have consistently bet on — and been rewarded for — the economic and pharmaceutical trajectory improving. Themes that are still in place and perhaps have been strengthened by recent events.
So whether it’s excitement about what a Treasury Secretary Janet Yellen might mean for international coordination on economic growth policies in a post-COVID world or bullishness around what how history says stocks perform under Democratic presidents with a split Congress, in the last few weeks everything has come up heads for investors.
“While the consensus sees reasons for pessimism around every corner, the U.S. economy has been beating consensus estimates consistently since the spring,” said Neil Dutta, head of economics at Renaissance Macro.
“Although fiscal policy has tightened and the prospects for additional action appear to have dimmed, the economy has managed to hold together… In short, there are more reasons for optimism over the next 12 to 18 months than there are reasons for pessimism over the next two months.
“The consensus and Fed see growth of about 4% next year — we’ll take the over by a wide margin.”
What to watch today
9:45 a.m. ET: Markit US Manufacturing PMI, November final (56.7 expected, 56.7 in preliminary print)
9:45 a.m. ET: ISM Manufacturing, November (58.0 expected, 59.3 in October)
10:00 a.m. ET: Construction Spending month-over-month, October (0.8% expected, 0.3% in September)
European and Asian markets buoyed by COVID-19 vaccine hopes [Yahoo Finance UK]
Zoom Q3 earnings crush analysts’ expectations [Yahoo Finance]
YAHOO FINANCE HIGHLIGHTS