The focus was on COVID-19 cases, vaccine updates and stimulus drama
The last week of 2020 summarized much of what this year was about: rising COVID-19 cases, vaccine developments, and stimulus disagreements. The volatile week kicked off with U.S. President Donald Trump's surprise signing of a heavily criticized $900 billion stimulus bill, which included $600 direct payments to Americans as opposed to $2,000. Still, all three major indexes surged in response, finishing Monday with record closes despite warnings from White House Advisor Dr. Anthony Fauci that recent Christmas and New Year's celebrations could lead to another surge in COVID-19 infections. By Tuesday, however, much of that optimism faded due to more stimulus gridlock in Congress. After the House passed a bill to increase stimulus checks to $2,000, Senate Majority Leader Mitch McConnell deterred Senate Minority Leader Chuck Schumer from fast-tracking that same bill.
Stocks bounced back some on Wednesday, but remained far from record highs after news the highly contagious COVID-19 strain that has been spreading across the globe was identified in the U.S. What's more, McConnell introduced a new bill that attached the higher stimulus checks to tech and election demands, making it unlikely to be approved by Democrats. And while the U.K.-approved AstraZeneca's (AZN) COVID-19 vaccine with the University of Oxford boosted investor sentiment, fresh Johns Hopkins University data showed the U.S. is averaging over 2,000 coronavirus deaths and 180,000 cases each day. Better-than-expected jobless data did very little to alter stocks on Thursday, but the three major benchmarks remained on track for weekly wins.
Wrapping Up 2020
Yet, for as crazy as this year was, the Dow, S&P 500, and Nasdaq closed the book on 2020 with gains of 6.6%, 15.5%, and 43.2%, respectively. And to put a neat little bow on top, here is a little snapshot for how the major indexes did on a monthly, and quarterly basis.
As of this writing, the Dow added 2.6% for the month, but was far off its November 11.8% gain, which ended up being its best month of the year. The blue-chip index gained 9.4% for the quarter.
The S&P 500 logged a December gain of 3.1% and quarterly gain of 11%. The Nasdaq closed out the month with a 5.3% win and tacked on a sizable 15% for the quarter. It was a third-straight quarterly win for all three indexes, as well as back-to-back monthly wins to close out 2020.
Blue Chips Making Headlines
A number of Dow stocks made headlines this week. For starters, Boeing (BA) took off on Tuesday after American Airlines (AAL) restarted 737 MAX commercial flights, following upgrades and safeguards on a key flight control system that came as the result of two fatal crashes. By Tuesday, attention shifted to Caterpillar (CAT), after Baird named the security a "top idea for 2021," and raised its price target to $220 from $206. JPMorgan Chase (JPM) also had its own moment in the sun, as investors continued to analyze the bank stock's performance over the past year and looked ahead to its January earnings report. Lastly, former Dow component and chip giant Intel (INTC) was lower after Third Point suggested business changes that could increase shareholder value going forward.
First Week of 2021 Brings More Employment Data
As investors dive head-first into the first week of 2021, there will be no shortage of economic indicators to unpack. Right out of the gate next week there's the Markit manufacturing Purchasing Manager's Index (PMI), the ISM non-manufacturing index, as well as a fresh jobless claims update and the ADP employment report. The Fed's latest meeting minutes are also on tap. The earnings docket looks far busier, too, with some big names scheduled to kick off a new earnings season, including Bed Bath & Beyond (BBBY) and Walgreens Boots Alliance (WBA), to name just a few. With 2020 coming to a close, watch these psychological numbers and see what to expect from the Nasdaq 100 rebalancing.