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Stocks Gain and US Election Reaches for a Conclusion and COVID Spikes

Weekly Update – November 13, 2020

  • The S&P 500 index rose 2.2% last week to a fresh closing high despite COVID-19 cases and hospitalizations also reaching new highs in the US, as vaccine hopes and post-election relief spurred strong gains led by the energy and financial sectors.
  • The market benchmark ended the week at 3,585.15, up from last Friday’s close of 3,509.44 and surpassing the previous closing high of 3,580.84 that had been recorded in early September.
  • This marks the measure’s second week of gains in a row. It is now up 9.6% for November as the passage of the US presidential election — with Joe Biden becoming the president-elect — sparked a relief rally.
  • The week’s climb came despite a continued rise in COVID-19 cases and hospitalizations as investors appeared hopeful for an effective vaccine and a Biden presidency to make the US economy stable again. Encouraging vaccine study data earlier in the week from Pfizer (PFE) and BioNTech (BNTX) boosted sentiment.
  • The energy sector had the largest percentage increase of the week, up 17.1%, followed by an 8.3% increase in financials. Other strong gainers included industrials, up 5.4%, and real estate, up 5.3%.
  • Only one sector declined this week: technology, down 0.3%.
  • The jump in energy stocks came as crude-oil futures climbed on the vaccine data, with investors hoping an effective vaccine could bring a big boost to oil consumption. Among the sector’s gainers this week, Diamondback Energy (FANG) shares soared 36% and Valero Energy (VLO) rallied 33%.
  • In the financial sector, shares of American Express (AXP) jumped 19% this week as UBS upgraded its investment rating on the payments company’s stock to neutral from sell while boosting its price target on the shares to $116 from $90. Among other strong gainers in financials, Citigroup (C) added 14% and Hartford Financial Services Group (HIG) rose 15%.
  • On the downside, decliners in consumer discretionary included some of the stocks that have benefited from stay-at-home trends as the vaccine news had some investors reversing their pandemic-related bets. Among them, Pool Corp. (POOL) fell 11%, Whirlpool (WHR) shed 6.4% and Amazon.com (AMZN) slipped 5.5%.
  • The drop in the technology sector also came amid the reversal of bets on companies receiving pandemic-related demand. Adobe (ADBE) shares fell 5.1%. Adobe said it has struck a deal to acquire Workfront, a work management platform for marketers, for $1.5 billion.
  • Next week, the housing market will come into focus as the November home builders index will be released Tuesday, followed by October housing starts and building permits Wednesday, and October existing home sales Thursday. Retail sales, import prices and industrial production for October are also expected Tuesday.

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