MENU

The week in review – US financial markets

Economic and political backdrop

The third announcement of positive preliminary vaccine results helped markets get off to a strong start to the week. AstraZeneca announced last Monday before the start of trading that the vaccine it was developing in partnership with Oxford University was up to 90% effective for one of two dosing regimens used in the study. The company’s shares fell back over the following days as reports emerged that the regimen had been mistakenly given to a smaller and younger test cohort, but investors generally seemed reassured that more vaccines that are easier to distribute appeared to be on their way.

The political environment also appeared supportive. Shares rallied Monday afternoon following reports President-elect Joe Biden was preparing to nominate former Federal Reserve Chair Janet Yellen as Treasury Secretary. Yellen’s dovish tenure while at the Fed and, more importantly, her being a known entity, seemed to put investors at ease. Reports that Biden’s transition team was pushing Congressional Democrats to compromise with Republicans on fiscal stimulus also appeared to boost sentiment, although these were later denied by a spokesperson. On Tuesday, stocks rallied further on news that the General Services Administration (GSA) was formally beginning transition measures in preparation for a Biden administration. While still refusing to concede, President Trump tweeted he was authorising the GSA’s action “in the best interest of our country.”

Economic data appeared to play a role in draining some of the week’s gains on Wednesday. Initial jobless claims rose unexpectedly to 778,000, their highest level in five weeks, while personal incomes fell 0.7% in October, offsetting September’s gain. The University of Michigan’s gauge of November consumer sentiment was revised slightly lower, hitting its lowest level (76.9) since August. The Conference Board’s measure of consumer confidence, reported Tuesday, also fell more than expected. Core (excluding defence and aircraft) capital goods orders surprised on the upside, however, rising 0.7% in October and building on September’s surge of 1.9%. New home sales also surprised on the upside.

Equity markets

The S&P 500 gained 2.3% (14.5% YTD). A new round of vaccine optimism and diminishing political uncertainty helped stocks build on recent gains for the holiday-shortened week. Most of the major benchmarks hit record highs, with the narrowly focused Dow Jones Industrial Average gaining the most attention by crossing the 30,000 threshold for the first time. Reopening hopes boosted cyclical shares, particularly energy stocks, while healthcare, utilities, consumer staples and real estate shares lagged. Value outpaced growth and small caps outperformed large caps, with Russell 1000 Growth returning 2.4% (32.2% YTD), Russell 1000 Value 2.8% (0.1% YTD) and Russell 2000 3.9% (12.5% YTD). The market was closed Thursday for the Thanksgiving holiday, but weekly trading volumes remained unusually elevated.

Fixed income markets

Vaccine and political developments helped push the US 10-year Treasury yield modestly higher to 0.84% from 0.83%.

Investment-grade corporate bond spreads tightened amid more positive vaccine headlines. Although overnight demand from Asia slowed at the start of the week, the beginning of month-end trading activity and low levels of new issuance added technical strength. US trading volumes were healthy before pulling back ahead of Thanksgiving Day.

Positive macro sentiment, progress in the development of a vaccine and therapeutic treatments, and solid equity gains bolstered risk appetite, aiding the performance of high yield bonds. Subdued new issuance and inflows to below investment-grade funds created favourable technical conditions, and credit spreads narrowed.

202011-1429301

Sign up for US Equity insights from T. Rowe Price

Share this article:

Share on linkedin
Share on email

Election 2020

Our US Political analyst reports from Washington on the campaign trail, see our insights into the impact of the election on your investments.

For Investment professionals only. Not for retail distribution.

Notes

All data and index returns cited herein are the property of their respective owners, and provided to T. Rowe Price under license via data sources including FactSet, Frank Russell, MSCI and S&P. All rights reserved. T. Rowe Price seeks to cite data from sources it deems to be accurate, but it cannot guarantee the accuracy of any data cited herein. Neither T. Rowe Price, nor any of its third-party data vendors make any express or implied warranties or representations and shall have no liability whatsoever with respect to any data and index returns contained herein. The data and index returns cited herein may not be further redistributed or used as the basis for other indices, as a benchmark or as the basis for any other financial product.

Financial data and analytics provider FactSet. Copyright 2020 FactSet. All Rights Reserved.

London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). © LSE Group 2020. All rights in the FTSE Russell indexes or data vest in the relevant LSE Group company which owns the index or the data. Neither LSE Group nor its licensors accept any liability for any errors or omissions in the indexes or data and no party may rely on any indexes or data contained in this communication. No further distribution of data from the LSE Group is permitted without the relevant LSE Group company’s express written consent. The LSE Group does not promote, sponsor or endorse the content of this communication.

MSCI and its affiliates and third-party sources and providers (collectively, “MSCI”) makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed, or produced by MSCI. Historical MSCI data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. None of the MSCI data is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such.

The S&P 500 Index is a product of S&P Dow Jones Indices LLC, a division of S&P Global, or its affiliates (“SPDJI”) and T. Rowe Price has been licensed for use by T. Rowe Price.  Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC, a division of S&P Global (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by T. Rowe Price. T. Rowe Price’s US Financial Markets – The Week in Review is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the S&P 500 Index.

Important Information

The specific securities identified and described are for informational purposes only and do not represent recommendations.

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. 

It is not intended for distribution to retail investors in any jurisdiction.

DIFC – Issued in the Dubai International Financial Centre by T. Rowe Price International Ltd. This material is communicated on behalf of T. Rowe Price International Ltd by its representative office which is regulated by the Dubai Financial Services Authority. For Professional Clients only.

EEA ex-UK – Unless indicated otherwise this material is issued and approved by T. Rowe Price (Luxembourg) Management S.à r.l. 35 Boulevard du Prince Henri L-1724 Luxembourg which is authorised and regulated by the Luxembourg Commission de Surveillance du Secteur Financier. For Professional Clients only.

Switzerland – Issued in Switzerland by T. Rowe Price (Switzerland) GmbH, Talstrasse 65, 6th Floor, 8001 Zurich, Switzerland. For Qualified Investors only.

UK – This material is issued and approved by T. Rowe Price International Ltd, 60 Queen Victoria Street, London, EC4N 4TZ which is authorised and regulated by the UK Financial Conduct Authority. For Professional Clients only.

© 2020 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.

You might be interested in…

See our comprehensive range of US equity funds

Thank you for registering for US equities updates. The latest insights will be sent straight to your inbox, in the meantime access our latest thinking:

Important Legal Information

This site is intended for investment professionals in EEA countries (excluding the Netherlands and the United Kingdom) and for qualified investors in Switzerland.

I have read the terms detailed below and confirm that I am an investment professional or qualified investor and that I wish to proceed.

Information contained in the T. Rowe Price website is not intended for investors in any jurisdiction in which distribution or purchase is not authorised, including the jurisdiction of the reader of this information, where applicable. For example, the information herein is not for distribution to and does not constitute an offer to sell or the solicitation of any offer to buy any securities in the United States of America to or for the benefit of United States persons.

Information obtained from this site is intended specifically for the individuals who have agreed to these Terms and Conditions and may not be redistributed without prior consent from the T. Rowe Price Legal department.

Past performance of the T. Rowe Price Funds SICAV and other securities is not a guide to future performance. The value of securities and any income generated from them might decrease as well as increase. Changes in rates of exchange may also have an adverse effect on the value, price or income of securities. Investors should also be aware of the additional risks associated with investments in emerging markets, high yield securities and smaller companies.

For EEA (excluding the Netherlands and the United Kingdom):

By accessing this website, you consent to T. Rowe Price collecting information by way of cookies. To find out more please read our cookie policy.

The information is designed for professional investors, including financial intermediaries or members of the media, and is published for informational purposes only. In particular, the information is directed at only informing persons falling within one or more of the following categories:

(a) A government;

(b) A bank or insurance company;

(c) A pension fund or charity;

(d) Persons whose ordinary activities involve them, as principal or as agent, in acquiring, holding, managing or disposing of investments for the purposes of a business carried on by them or whom it is reasonable to expect will, acquire, manage or dispose of investments for the purpose of such a business;

(e) Persons whose ordinary business involves the giving of advice, which may lead to another person acquiring or disposing of an investment or refraining from so doing;

(f) Representatives of the media for corporate and background information about T. Rowe Price.

Persons who do not fall into one of the above categories should not act upon the information contained herein.

Certain persons may have access to information regarding the T. Rowe Price Funds SICAV, an investment company incorporated as “Société d’Investissement à Capital Variable” (‘SICAV’) under the laws of Luxembourg. The T. Rowe Price Funds SICAV sub-funds referred to on the site are only offered by the current prospectus. The prospectus contains more complete information about the sub-funds, including investment objectives, charges and expenses. However, the prospectus and other information relating to the sub-funds will not be intentionally distributed to persons in any country where such distribution would be contrary to local law or regulation.

Raiffeisen Bank International AG, Austria, acts as the paying and information agent for the sub-funds of the SICAV that are approved for public distribution in Austria or from Austria, and Deloitte Tax Wirtschaftsprüfungs GmbH acts as the tax representative for these sub-funds in Austria. Nordea Bank Danmark A/S, is the representative agent of the sub-funds of the SICAV which are approved for public distribution in or from Denmark. J.P. Morgan AG, Germany, is the representative and paying agent of the sub-funds of the SICAV that are approved for public sale in or from Germany. Société Générale Securities Services S.p.A (Italy) is the paying agent of the sub-funds of the SICAV admitted to public distribution in or from Italy. RBC Investor Services España, S.A.U., Spain, is the representative agent of the SICAV sub-funds that are approved for public distribution in or from Spain. Skandinaviska Enskilda Banken AB is the paying agent of the sub-funds of the SICAV which are approved for public distribution in or from Sweden.

This information herein does not constitute investment advice and the products described may not be available to or suitable for all investors. You should consider, if appropriate, obtaining independent professional advice before making an investment decision.

For EEA (excluding the Netherlands and the United Kingdom), the content appearing in this Section of the T. Rowe Price website has been issued by T. Rowe Price (Luxembourg) Management S.à r.l. 35 Boulevard du Prince Henri L-1724 Luxembourg which is authorised and regulated by the Luxembourg Commission de Surveillance du Secteur Financier.

For Switzerland:

This website is intended for investment intermediaries and contains advertising.

I have read, understood and accept the following general terms and conditions and confirm that I am a qualified investor based in Switzerland within the meaning of Swiss law regarding collective investment schemes and will not pass on any of the information available on this website or downloaded from this website to third parties.

By accessing this website, you consent to T. Rowe Price collecting information by way of cookies. To find out more please read our cookie policy.

The information in the T. Rowe Price website is exclusively directed at qualified investors within the meaning of the Federal Act on Collective Investment Schemes (‘CISA’) and its implementing ordinance as well as according to the most recent interpretation of the Swiss Financial Market Supervisory Authority FINMA with domicile in Switzerland.

In particular the following are considered qualified investors within the meaning of CISA: supervised financial intermediaries (e.g. banks, securities dealers, fund management companies), supervised insurance institutions, public entities and pension schemes with professional treasury management, enterprises with professional treasury management, high net worth individuals who have elected in writing to be deemed qualified investors and independent asset managers who have declared in writing that they will be using the information herein only for clients that are qualified investors.

Certain persons may have access to information regarding the T. Rowe Price Funds SICAV (‘SICAV’), an investment company incorporated as “Société d’Investissement à Capital Variable” under the laws of Luxembourg. The SICAV and certain sub-funds have been approved for public distribution in other jurisdictions such as Switzerland. However, not all of the sub-funds accessible on this website may be registered for public distribution in or from Switzerland. The Swiss Financial Market Supervisory Authority FINMA publishes a list of foreign collective investment schemes which are approved for public distribution in or from Switzerland on their website. First Independent Fund Services Ltd., Zurich, is the representative of the sub-funds of the SICAV which are approved for public distribution in or from Switzerland and Helvetische Bank AG, acts as the paying agent in Switzerland of such sub-funds.

The T. Rowe Price Funds SICAV sub-funds referred to on the site may not be available to or suitable for you. Investment or other decisions should not be made solely on the basis of this website. In particular, you should not enter into any investment before you have read the corresponding fund documents such as the prospectus and the key investor information documents (KIIDs) as well as the annual and semi-annual reports in order to familiarize yourself with the specific risk associated with a specific sub-fund. The prospectus contains more complete information about the sub-funds, including investment objectives, charges and expenses. The prospectus, the key investor information documents (KIIDs), the articles, as well as the annual and semi-annual reports may be obtained free of charge from First Independent Fund Services Ltd., Zurich. However, the prospectus and other information relating to the sub-funds will not be intentionally distributed to persons in any country where such distribution would be contrary to local law or regulation.

The information on this website has been prepared for information purposes only and does neither constitute investment advice or other advertisement or recommendation nor an offer or solicitation to purchase or sell investment instruments, to effect any transaction or to enter into any legal relations. The investment instruments described may not be available to or suitable for all investors. You should consider, if appropriate, obtaining independent professional advice before making an investment decision and be aware of local laws governing investments.

Unless otherwise noted, the content appearing in this section of the T. Rowe Price website has been issued by T. Rowe Price (Switzerland) GmbH, Talstrasse 65, 6th Floor, 8001 Zurich, Switzerland. First Independent Fund Services Ltd, Klausstrasse 33, CH-8008 Zurich is Representative in Switzerland. Helvetische Bank AG, Seefeldstrasse 215, CH-8008 Zurich is the Paying Agent in Switzerland. The place of performance and the place of jurisdiction is at the registered office of the Swiss Representative.