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Market Edges Down with Stimulus in Limbo

Weekly Update – December 25, 2020

  • The S&P 500 index edged down 0.2% last week as congressional efforts to pass another stimulus package remained in limbo and market participants checked out for the long holiday weekend.
  • The market benchmark ended Thursday’s session at 3,703.06, down from last week’s close of 3,709.41. This week’s move came in just three-and-a-half sessions, as the market closed several hours early Thursday for Christmas Eve and will be closed all day Friday for Christmas Day.
  • The S&P 500 is still up 2.2% for the month of December and up 15% for the year to date, with just four sessions remaining to both the month and year.
  • The week’s slight decline came as the latest pandemic stimulus package remained in question, with congressional Republicans blocking an effort by Democrats to raise the plan’s stimulus checks to $2,000 from $600 despite President Donald Trump’s insistence that the amount sent to most Americans be increased.
  • Even as vaccines are being distributed to health care workers, concerns about the pandemic ramped up amid questions about how the holidays will affect cases that are already near record levels. A new COVID-19 strain in the UK only added to the worries.
  • The energy sector had the largest percentage decline of the week, falling 1.9%, followed by a 1% drop in consumer staples and a 1.1% slip in communication services. Only two sectors were in the black: Financials rose 2.2% and technology climbed 0.9%.
  • The energy sector’s decliners included Occidental Petroleum (OXY), which fell 4.6%, and Apache (APA), down 5.9%.
  • In consumer staples, shares of Costco (COST) shed 0.7% as RBC Capital reduced its price target on the warehouse retailer’s stock to $435 per share from $439. RBC maintained its investment rating on the stock at outperform.
  • On the upside, the advance in financial stocks came as Morgan Stanley said banking stocks have a 2% to 5% upside following the Federal Reserve’s surprise announcement last week allowing share buybacks starting next month. Shares of Morgan Stanley (MS) rose 6.1% while Goldman Sachs (GS) added 5.8% and Bank of America climbed 4.5%.
  • The technology sector’s gainers included Paycom Software (PAYC), whose shares rose 5.1% on the week amid a boost to its price target from Stifel Nicolaus. The price target was raised to $465 From $405.
  • Next week’s schedule of economic data is light, with no major data points on tap for Monday and only the October S&P Case-Shiller home price index due Tuesday. Wednesday, the market will get more housing data with November pending home sales due, along with Chicago manufacturing data, while Thursday – the final trading session of the year – will feature jobless claims.

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