November, 2020; A Month to Remember
December 7, 2020
By Krista Eberly, CFP®
Securities Analyst II
In last week's commentary, my colleague Michael List, wrote about the Dow Jones Industrial Average Index hitting the 30,000 milestone on November 24. The month of November turned out to be a record-breaking month in many regards. That momentum continued into the first couple of days of December as the Dow Jones, NASDAQ, S&P 500, and Russell 2000 Indices all closed at record highs on Friday.
November Showed Strong Market Finishes
Most major indices recorded double-digit gains in November. The S&P 500 rose 10.9% on a total return basis, its best November in its history. The Dow Jones gained 11.9%, its best monthly gain since 1987. The NASDAQ rose 11.8%, its best November since 2001. Not only was it a phenomenal month of performance, we also witnessed a market rotation. The areas that have been laggards most of the year (small caps, value, financials, and energy to name a few) ended up being the top performers during the month. This led to a broadening rally as illustrated in the chart below from the Wall Street Journal. Four hundred sixty-four of the five hundred names in the S&P 500 posted a monthly gain in November; to contrast this, only one hundred fifty-three names recorded gains in September. With more areas of the market participating in the rally, a broadly diversified portfolio performed well last month.
Two Contributing Factors
1. The End of an Election
First, was the Presidential election being behind us (for the most part). After Election Day, volatility tends to decline as we have more clarity on what to expect going forward.
2. Positive Vaccine News
Three companies reported efficacy data from the Phase III clinical trials for their vaccines. All showed strong and encouraging results. Pfizer was first to report on November 9, followed by Moderna a week later, then AstraZeneca a week after that. An interesting thing to note is all three of these vaccines were developed in a matter of months. This is record breaking within itself as historically vaccines take years to get to this point. This speaks volume to the advancements in modern medicine.
The Importance of Vaccine News
Why does vaccine news matter? Because the coronavirus is currently surging in the U.S. We are at record highs for daily case count, hospitalizations, and deaths. It is grim news to say the least. However, the positive vaccine news gives us hope that there is light at the end of the tunnel. Both Pfizer and Moderna have filed for emergency use authorization from the Food and Drug Administration (FDA) for their vaccines. The FDA committee meets this Thursday on Pfizer’s vaccine; there is a meeting scheduled for December 17 for Moderna’s vaccine. This sets the stage to have at least one vaccine approved before year-end. If this comes to fruition, we could have a vaccine widely available at some point in 2021.
This year has been a difficult one. Through it all, the U.S. economy, Americans, and the stock market have shown resiliency. While there are significant challenges still existing and ahead for service industries and those dependent on them for their livelihood, America is a strong country and these challenges will be overcome.
This is my last commentary for the year so I wish you all a happy and safe holiday season, and I hope that 2021 is a better year for everyone. If you have any questions or would like to schedule a portfolio review, please contact us today.