And yet another positive week for the US stock markets, as the Dow (+1.1%), NASDAQ (+2.1%), and S&P 500 (+1.7%) extended their gains from November. For the week, the gains were widespread across most industries, including small- and mid-caps, and not just large cap technology stocks. Taxable bonds were mixed last week, while tax-free muni bonds were up about a half percent, as they continue to show strong gains and recover from their lows hit in March. Last Monday concluded November, as the S&P 500 gained 10.8%, it largest gain in eight months, and the largest November gain for that index since 1928. November’s gain also erased the losses experienced in September and October, as each of the three indices extended their record highs.
The gains in the markets are a sign that investors are encouraged by the vaccines that may be distributed as early as this week. Further, many economists are projecting 2021 earnings to be strong, and also an increase from their levels in 2019, prior to the pandemic. This optimism is also in spite of the recent and rapid rise in COVID cases that are also causing several state governments to shut down economic activity. Further, the jobs report released last week is demonstrating a slowing rate of recovery in the labor markets. For those of you who routinely read my weekly recaps, this is a reminder that I am very cautious about jumping into the markets when the COVID risk remains on the forefront of our daily lives.