Weekly Orion Market Call – Post Election Week
- Breaking news the week of November 9 is headlined by positive results of vaccine trials:
- On Monday, 11/9/20, the American multinational pharmaceutical company, Pfizer, came out and announced that their COVID-19 vaccine is more than 90% effective.1
- This is great news for humanity, the economy and the stock market.
- We are seeing a rotation out of growth names with big pops in value and small-cap names.
- This will be important to watch, as growth has been the clear leader during the pandemic, but now with some optimism around a vaccine, we expect value and small-caps to add value above growth.
- This has been a historic week in many ways. Highlights include:
- Global stocks had their best weekly gain since early April, as investors reacted to the increased possibility of a divided U.S. government, including a potential Biden win (as of Saturday) and continued Republican control in the Senate.2 As far as the markets go, this was the best election week gain in decades.
- Bond yields dropped on the apparent Biden victory coupled with the continued Republican Senate.
- The S&P 500, the Dow Jones and Russell 2000 all rose approximately 7%.
- Tech was up over 9%.
- Growth significantly outperformed value as financial and energy stocks lagged.
- Developed international stocks rose more than 8% on additional monetary stimulus and emerging market stocks were higher by 6.5%.
- The Nikkei in Japan reached its highest level since 1991.3
- Friday’s jobs report showed the U.S. economy added 638,000 new jobs in October, pushing the unemployment rate down to 6.9%.4
- An improvement for sure, and better than expected, but unemployment is still double where it was before the pandemic.
- There seem to be expectations for a smaller stimulus package now, though current Senate Majority Leader Mitch McConnell has stated he would like to take over for Secretary of the Treasury, Steve Mnuchin, in negotiations with Nancy Pelosi.
- The Fed meeting last week resulted in rates unchanged, so nothing new there.
- Important economic data being released this upcoming week includes both the CPI and PPI reports and University of Michigan Sentiment.
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