Weekly Economic Update: COVID-19 Vaccine Spurs, Market Rallies

Presented by David Nicholas

November 16, 2020

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Weekly Market Update

In this week’s recap: A COVID-19 vaccine spurs a stock market rally, even as more cases are reported and some areas renew lockdowns.

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The Week on Wall Street

News of a COVID-19 vaccine ignited a rally in economically sensitive stocks and a broad retreat in technology companies last week, though enthusiasm was tempered by reports of rising new infections and fresh lockdowns.

The Dow Jones Industrial Average surged 4.08%, while the Standard & Poor’s 500 rose 2.16%. The Nasdaq Composite index fell 0.55% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, jumped 4.01%.^1,2,3

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Vaccine Hopes

Reports of an effective COVID-19 vaccine sent stocks soaring on Monday as the end to economic uncertainty appeared to be in sight. Stocks that had been pummeled by economic lockdowns surged on the news, while the stay-at-home stocks suffered steep declines. Bond yields and oil prices both moved higher on expectations of increased economic activity.

Market enthusiasm evaporated in the days that followed, however, as higher COVID-19 infections, new lockdowns, and low expectations for a new fiscal stimulus package dampened the optimism brought on by the pending vaccine.

Stocks closed the week on a higher note, with cyclical stocks adding to their gains and technology companies shaving part of their losses.

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Clouds Over Chinese Capitalism

The market was caught by surprise last week when Chinese regulatory authorities issued draft guidelines to address concerns over abusive monopolistic practices. Shares in some of the biggest Chinese technology companies dropped on the news. This follows the prior week’s suspension of a listing of a large initial public offering for one of the country’s leading fintech companies.

It’s difficult to say whether Chinese regulators are acting on concerns that western nations have with the dominance of Big Tech companies, or if they are attempting to rein in the power and influence of privately owned corporations. An answer may not be clear anytime soon, but investors will be watching.

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Tip of the Week

Adult children may ask you to help them out with business financing or a down payment on a property. While it's tempting to say yes, it's may be best to determine if your personal finances can handle it.

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Media

President and Founder of Nicholas Wealth Management, David Nicholas joined Fox Business’ Maria Bartiromo on November 16, 2020 to discuss retail earnings, Georgia Senate runoff, and his stock picks for the week. Click below to watch!

Also, be sure to subscribe to our YouTube page for all of David’s media commentaries if you are unable to watch them live CLICK HERE!

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CITATIONS:

1. The Wall Street Journal, November 13, 2020

2. The Wall Street Journal, November 13, 2020

3. The Wall Street Journal, November 13, 2020