Markets, Economy

Weekly Kickstart (12/28/2020-01/01/2021)

12/28/20 8:00 AM

iStock-626627280.jpgThe market rally took a pause last week as the S&P 500 slid by 0.17 percent to 3,703.06. That still left the benchmark index up 14.62 percent 2020-to-date, and just 0.52 percent below the all-time closing high. Despite the modest week-over-week change in the S&P 500 the intraday price action was actually quite choppy, in part because of thin trading volumes related to the Christmas holiday, as well as the ultimate size and scope of the long-awaited pandemic relief package remaining unknown.

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Fortunately it appears that over the weekend this fiscal issue was finally resolved, and it is also worth noting that historically these last few days of the year have tended to be excellent for stocks. In fact, since 1928 the final week of the year has been positive for the S&P 500 68.29 percent of the time, and on average the broad index has risen 0.91 percent, together making this the best 1-week period for equities by a wide margin. Of course past performance does not guarantee future returns, and 2020 in many ways has been anything but typical. Moreover, the uncertainty surrounding next week's Georgia runoff election that will determine control of the Senate has the potential to offset any favorable seasonality, and regular investors uncomfortable navigating this environment should therefore consider reviewing their positioning to make sure it is properly aligned with their risk tolerance, nearness to retirement, and other unique variables. Additional assistance is available by consulting with a professional financial advisor and as always, we are here to help with any questions you may have.

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To recap a few of the things we learned about the economy last (holiday-shortened) week, the positives included that a gauge of regional manufacturing activity firmed, third quarter U.S. gross domestic product growth was revised higher, private-sector wages rose, household inflation pressures remained muted, demand for U.S.-made durable goods increased, and a key measure of business investment strengthened. As for the negatives, mortgage applications fell, existing home sales moderated, new home sales plunged, proprietors’ incomes declined, consumer confidence softened, the personal savings rate decreased, household spending weakened, and the number of Americans making first-time claims for unemployment benefits remained extremely elevated. This (holiday-shortened) week the pace of economic data remains slow but there are still a few important reports on manufacturing and housing scheduled to be released.

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What To Watch:

Monday

  • Dallas Fed Manufacturing Survey 10:30 AM ET
  • 2-Yr Note Auction 1:00 PM ET
  • 5-Yr Note Auction 1:00 PM ET

Tuesday

  • Case-Shiller House Price Index 9:00 AM ET
  • 7-Yr Note Auction 1:00 PM ET

Wednesday

  • Pending Home Sales Index 10:00 AM ET
  • EIA Petroleum Status Report 10:30 AM ET
  • Survey of Business Uncertainty 11:00 AM ET

Thursday

  • 2-Yr Note Settlement
  • 5-Yr Note Settlement
  • 5-Yr TIPS Settlement
  • 7-Yr Note Settlement
  • 20-Yr Bond Settlement
  • Jobless Claims 8:30 AM ET
  • EIA Natural Gas Report 10:30 AM ET
  • Baker Hughes Rig Count 1:00 PM ET
  • SIFMA Rec. Early Close 2:00 ET

Friday

  • New Year's Day
  • All markets closed
 

 

Sources: Econoday, FRBSL

Post author: Charles Couch

Disclosures