December Market Update

We’ve got a lot to be thankful for this month. The major US stock market indices delivered some historic returns in November, and many investors are focusing on end-of-year strategies. As 2020 winds down, there are a few things we’re thinking about and keeping an eye on for our clients and thought we’d share.

1. Hefty November Market Rally
What a month in the markets! The Dow Jones Industrial Average had its best month in 33 years, tacking on gains of nearly 12%. The S&P 500 and Nasdaq followed suit, adding gains of over 11%; their best gains since April of this year. As the major market indices sit at or near record highs at this time, the general narrative for November’s fiery market rally has been optimism surrounding the finalization of Covid-19 vaccines. Moving on from the election has removed a lingering cloud of uncertainty from the markets – and the markets like it. The President Elect’s stance on key business and economic policies seem most likely to be moderate. The equity markets seem to be enjoying this perceived tailwind as well.

2. Santa Claus Rally?
Over the last 74 years, the S&P 500 has risen an average of nearly 1.5% in the month of December. More notably, in December months following a presidential election, the S&P 500 has risen over 80% of the time. This seems to bode well for equities heading into the end of the year. Entering December, the VIX (Volatility S&P 500 Index) traded at its lowest level since late February 2020; further signaling investor confidence and optimism.

3. Black Friday & Cyber Monday 2020
Black Friday was not the same in 2020; as consumer behavior has experienced some forced evolution. Preliminary data from Adobe Analytics forecasts Black Friday online sales to be between $9 – $10.5 billion. This would be growth of 20 – 40% year over year. Meanwhile, foot traffic at brick-and-mortar stores declined by approximately 52%. These changes are not surprising on the surface. Some economists theorize that increased online sales will not be enough to compensate for the lack of store visits. Time will tell the story as the data becomes available. 2020 Cyber Monday online sales reached $10.8 billion according to Adobe, making it the biggest US online shopping day ever. The figure represents a 15% + increase from a year ago – although the figure did come in below Adobe’s forecast for $12.7 billion in spending.

December provides a timely opportunity to review and optimize portfolios. If there is anything on your mind – an idea, a concern, IRA contributions, end-of-year strategies, or something else; feel free to call me.

As always, I am here when you need me.