• It was another big week for U.S. stock markets,
although the tech-laden NASDAQ did not
participate in the jumps as much as the other U.S.
• The small-cap Russell jumped 6.1% this week,
which is on the heels of last week’s 6%+ gain,
while the DJIA moved up 4.1% and the S&P 500
• NASDAQ dropped 0.6% on the week as further
evidence that a cyclical rotation out of tech names
is occurring, but two weeks does not necessarily
make a trend
• Last week saw the markets record their biggest
gains since April and this week that rally continued
as Wall Street remained hopeful that news about
potential vaccines being available this year gave
the markets reason to cheer
• Nine of the 11 S&P 500 sectors closed in positive
territory and the Energy sector saw a whopping
16.5% gain on the week, almost double the
returns of the Financials sector, which gained
• Consumer Discretionary and Information
Technology ended the week red, dropping 1.1%
and 0.4%, respectively
• Volatility was stable from the beginning to the end
of the week, although there were spikes on
Tuesday and Friday mornings
• WTI Crude ended last Friday around $37/barrel
and ended this Friday at about $40/barrel
• The 10-year Treasury yield ended the week at
Stocks Rise Again on News of a Vaccine
With the exception of NASDAQ, which declined slightly on
the week, the other major U.S. market benchmarks rose
significantly for the second week in a row. The small-cap
Russell 2000 leapt 6%, on the heels of last week’s 6%+
gain and the 4%+ gain for the DJIA put it within shouting
distance of that ceremonial 30,000-point threshold.
All of the major indexes hit all-time intraday highs early
Monday morning, but then gave back many of the gains
before moving up again sharply to end the week. Even the
international, developed markets as represented by MSCI
EAFE had a big week, gaining over 4% and within 200
basis points of being positive YTD.
To underscore the rotation that has been occurring
recently, it was the concentrated-30-stock DJIA and
smaller-caps outperforming whereas NASDAQ – and the
large tech names – were surrendering some gains.
To really underscore the point, just look at how well the
Energy sector performed on the week versus the
Information Technology sector: a 16% gain to a 1% loss.
And finally, it was the value names that outpaced their
From an economic data perspective, the picture was
mixed. Small businesses reported feeling more optimistic,
weekly jobless claims fell more than expected and
continuing claims dropped below 7 million. Further, CPI
data seemed to suggest that inflation was less of a worry
too. All that being said, the University of Michigan’s
measure of consumer sentiment in November was worse
than expected and dropped to a three-month low.
The news of the week – besides the media calling the
2020 presidential race for former Vice President Joe
Biden – was when Pfizer announced that their vaccine
was over 90% effective in preventing infections in trials
and that production and delivery could ramp up by year’s
Inflation Relatively Unchanged
At the end of the week, the Bureau of Labor Statistics
reported that the Consumer Price Index for All Urban
Consumers was unchanged in October
on a seasonally adjusted basis after rising 0.2 percent in
September. Over the last 12 months, the all items index
increased 1.2 percent before seasonal adjustment.
From the BLS release:
• Component indexes were mixed, with many
offsetting increases and decreases.
• The food index rose 0.2 percent, with the food
away from home index increasing by 0.3 percent
and a smaller 0.1-percent rise in the food at home
• The energy index rose 0.1 percent in October as
the index for electricity increased 1.2 percent.
• The index for shelter increased 0.1 percent in
October, which was offset by a 0.4-percent
decrease in the index for medical care.
• The indexes for airline fares, recreation, and new
vehicles were among those to rise, while the
indexes for motor vehicle insurance, apparel, and
household furnishings and operations declined.
Small Businesses More Optimistic
The National Federation of Independent Business
released their Small Business Economic Trends data on
November 11th and reported that:
“The NFIB Optimism Index remained at 104.0 in October,
unchanged from September and a historically high
reading. Four of the 10 components improved, 5 declined,
and 1 was unchanged. Although all of the data was
collected prior to Election Day, a 6-point increase in the
NFIB Uncertainty Index to 98 was likely driven by the
election and uncertain conditions in future months due to
the COVID-19 pandemic and possible government-mandated shutdowns. The uncertainty reading was the
highest reading since November 2016.”
Further, the NFIB found the following trends:
• Earnings trends over the past three months
improved 9 points to a net negative 3% reporting
• Earnings trends have improved to pre-crisis
levels, up 32 points since June.
• Real sales expectations in the next three months
increased 3 points to a net 11% expecting gains.
• Owners expecting better business conditions over
the next 6 months declined 5 points to a net 27%.
Small Businesses Looking to Hire
As reported the week prior in the NFIB monthly jobs
report, small business owners are looking to hire,
reporting a historically high level of job openings in
October, including that:
• 55% of owners reported hiring or trying to hire in
October, down 1 point from September.
• 33% percent of all owners reported job openings
they could not fill in the current period, down 3
points from September’s report.
• 23% reported raising compensation and 18% plan
to do so in the coming months, up 2 points.
• 8% cited labor costs as their top business
problem (down 1 point) but 22% said that labor
quality was their top business problem, exceeding
taxes, regulations, and weak sales.
• 35% in construction report finding qualified
workers as their top issue, slowing new home