The US stock markets rallied last week, as the Dow (+6.9%), NASDAQ (+9.0%) and S&P 500 (+7.4%) exhibited their largest gains since April. Bonds (BOTH taxable and muni tax-free) also gained about 0.5% to 1% last week, so it was essentially green across the screen, so to speak. And if you like that, then you’ll LOVE the fact that Dow futures are up another 5% this morning. As I noted in my lengthier description last Friday, the markets rallied last week because the election results mostly indicated that there would be a divided Congress, limiting extreme legislation from being passed. This morning’s strong rally is because Pfizer announced a vaccine that may provide a 90% efficacy, which is far more efficient than previously projected for a vaccine.
From a fundamental perspective, we had a favorable jobs report last week, as the economy gained more jobs in October than previously expected, lowering the unemployment rate to 6.9%. Other fundamentals, such as better-than-expected 3rd quarter GDP results, a better-than-expected rise in manufacturing activity, and corporate earnings exceeding expectations are all having very favorable impacts on the markets. Now, with a vaccine potentially in the wings, hopefully this will help ease people’s minds of being able to get back to “normal” again. In reality, I don’t see “normal” for at least another year or two, but most areas of the economy do not necessitate normality.