US Stock Markets Ended Dec. 24, 2020

Bob Carey
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US Stock Markets Ended Dec. 24, 2020

Posted Under: Weekly Market Commentary

The S&P 500 moved slightly lower during the holiday-shortened week as investors weighed a likely stimulus deal with a new variant of the coronavirus in the U.K. that spreads faster and could make vaccines less effective. Financials and technology were the best performing sectors for the week. Banks gained after passing the latest stress test with flying colors. In an unexpected move, the Federal Reserve allowed profitable banks to resume share buybacks, though dividends are still capped at current levels. JP Morgan Chase & Co. quickly announced a $30 billion share buyback. Technology stocks moved higher on news that Apple Inc. is entering into the self-driving car market and a surge in cybersecurity stocks due to the widespread Russian hack. Fireye Inc. initially fell by over 10% after disclosing the hack of its network but then surged over 50% as many other firms were also hacked, which is likely to drive incremental demand for their solutions. Work-from-anywhere also climbed to new heights as rolling lockdowns continue around the globe and cases remain high in the near term until the vaccines can be more widely distributed. Tesla Inc. entered the S&P 500 after Friday's close on December 18th as the 6th largest weight. Shares of the electric-vehicle maker went parabolic before being added to the major index, gaining 730% for the year and 70% since the announcement of inclusion on November 16th. However, shares fell by nearly 5% during its first week in the index. While the short run has more uncertainty due to COVID-19, the longer term looks more promising with the U.S. signing a bigger agreement for vaccine doses with Pfizer Inc. Additionally, continued loose monetary policy and a reopening of the economy could be a powerful one-two punch for equities into 2021.

Posted on Monday, December 28, 2020 @ 8:33 AM • Post Link	Share:
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

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