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The holiday shortened trading week saw the S&P set a fresh record high on Monday as another round of unemployment benefits and stimulus checks were announced. The market has increasingly focused on the size and magnitude of the stimulus bill as well as the rising coronavirus case count and initial stages of the vaccine rollout. Even as the vaccine is rolled out, England has extended its toughest coronavirus restrictions to three quarters of the population. This week also saw the signing of a long-awaited Brexit deal between the U.K. and the E.U. On the economic front, the Bureau of Labor and Statistics released initial jobless claims that were sizably below consensus estimates and the prior period. Although positive, the levels are still firmly elevated from pre-pandemic levels and point to a job market that is still under stress. As we enter the new year, we expect GDP growth to slow in Q1, but eventually recovering. We also expect bouts of volatility in the equity market as investors balance rising case counts and continued vaccinations, however, we think that market will be supported by historic monetary and fiscal support and has a positive long-term outlook.
Stocks finished 2020 with a gain of more than 15%1, a welcome figure but one that doesn't begin to tell the story of the market's path to get there. Nevertheless, this was fifth year in the past decade in which the S&P 500 posted a return of more than 15%, doing so in a year that contained a global pandemic, record-breaking recession and a contentious presidential election. This highlights:
So as we turn the page on the calendar, here are a few of our key views for 2021:
Craig Fehr, CFA
Sources: 1. Factset, S&P 500 total return.
|Dow Jones Industrial Average||30,606||1.3%||7.2%|
|S&P 500 Index||3,756||1.4%||16.3%|
|10-yr Treasury Yield||0.92%||0.0%||-1.0%|
Source: Morningstar, 1/3/2021. *3-day performance ending on Wednesday. Bonds represented by the iShares Core U.S. Aggregate Bond ETF. Past performance does not guarantee future results.
The Week Ahead
The upcoming week will see the PMI composite, Unemployment Rate, and Factory Orders data being released.
The Weekly Market Update is published every Friday, after market close.
This is for informational purposes only and should not be interpreted as specific investment advice. Investors should make investment decisions based on their unique investment objectives and financial situation. While the information is believed to be accurate, it is not guaranteed and is subject to change without notice.
Investors should understand the risks involved of owning investments, including interest rate risk, credit risk and market risk. The value of investments fluctuates and investors can lose some or all of their principal.
Past performance does not guarantee future results.
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