Stocks traded higher during this abbreviated holiday week, propelled by a third Covid-19 vaccine option edging closer to viability. The presidential election results became clearer this week, as certifications of the vote in key states have given former Vice President Joe Biden enough electoral votes to claim the presidency. His signaling of former Federal Reserve Chair Janet Yellen as Treasury Secretary was received warmly by markets; her previous experience, coupled with statements expressing the need for additional fiscal relief to bridge to gap until vaccines are widely available is seen positively by markets.
As part of the broader run-up in stocks this week, the Dow Jones Industrial Average reached a record high above the 30,000 level for the first time. Although its 30 constituent companies represent a narrowly focused slice of the U.S. stock market, the average is nevertheless an important barometer of the U.S. market, as well as a fixture of media reports. While it took 18 years for the Dow to climb from 10,000 to 20,000, the move from 20,000 to 30,000 took less than four years. The S&P 500 Index and NASDAQ Composite Index also posted significant gains this week; both fell just short of establishing new record highs.
First-time unemployment claims rose to 778,000 – increasing in back-to-back weeks for the first time since July, and reaching the highest level in five weeks. In contrast, continuing claims fell again, to 6.1 million. While the unemployment numbers generate some concern, other economic data provided a more favorable recovery outlook. A strong third-quarter rebound in corporate profits, continued strength in the housing and auto markets, higher-than-expected orders for new capital equipment from U.S. businesses, and strong future projections from U.S. purchasing managers in both the manufacturing and service sectors all indicate economic strength.
Uneven labor market trends, rising numbers of coronavirus cases and hospitalizations, and the unresolved issue of U.S. Senate control will likely serve up volatility in the markets over the next several months. However, markets are looking beyond these short-term roadblocks to a stronger recovery in 2021. This is based upon the hope of vaccines leading us to a return to “normal.”
As we continue to navigate through the pandemic, our commitment remains to be here for you each step of the way. As always, please contact us with any questions about the economy and your financial plan.
We are committed to providing timely and actionable communication to our clients. If you’re looking for more financial insights, check out our detailed quarterly investment commentary. You also might be interested in two other new articles on our blog that address practical matters. One post offers tips on leveraging health savings accounts to save for retirement, while another article covers the ins and outs of avoiding cyber scams. As always, please reach out with any questions. We are here for you!