Market Perspective for December 8, 2020

Markets opened the week on a mixed note. The Nasdaq led with an advance of 0.45 percent while the Dow Jones Industrial Average retreated 0.49 percent on the day. Likewise, the S&P 500 also dipped with a loss of 0.19 percent, while the Russell 2000 Index lost 0.63 percent.

Equities traded in a tight range on Monday with technology shares leading and energy lagging. Crude oil dipped 1 percent on Monday. Saudi Arabia raised prices for Asian buyers on Sunday, but it lowered prices for the United States yet again. Prices remain lower in the U.S. thanks to ample domestic production.

On the other hand, technology stocks had a positive start to the week with major funds and notable tech companies posting relatively solid gains. SPDR Technology (XLK) gained 0.28 percent on the day. Apple (AAPL) helped fuel this boost in the fund with an increase of 1.19 percent. Bloomberg reported that Apple is working on new custom-designed chips for its various Macintosh computer lines. The expectation is that the chip innovation will far exceed the performance of the Intel chips that are currently in use, which propelled the increase in Apple shares on Monday. Shares of Intel (INTC) fell 3.40 percent on the day, however, semiconductors were resilient against this decline. iShares PHLX Semiconductor (SOXX) gained 0.57 percent. SPDR Communication Services (XLC) climbed 0.63 percent. Shares of Netflix (NFLX) rose an impressive 3.51 percent.

This week will reveal an extremely limited range of economic data. Most notably, the Job Openings and Labor Turnover Survey for October will be out on Wednesday and is anticipated to reflect positive job growth. It tracked an additional 6.4 million job openings in September. The report was favored by Treasury Secretary nominee Janet Yellen when she was the chair of the Federal Reserve and holds significant weight in terms of taking a pulse on the actual employment landscape.

Economists project weekly initial unemployment claims fell to 712,000 last week. Initial claims haven’t declined below 700,000 since the start of the pandemic, which signals that the employment data may be skewing stock performance to an unbalanced degree. Continuing claims have steadily declined though as job seekers re-enter the workforce and the private sector steadily adds more jobs. The state insurance programs are down to 5.52 million claims from more than 20 million at the height of lockdowns.

The U.S. Dollar Index rebounded 0.16 percent on Monday after falling to a new 52-week low last week, which helped to buoy some confidence. Commodity results were generally solid, though Global X Copper Miners (COPX) fell 1.68 percent. VanEck Rare Earth (REMX) gained 1.28 percent, Global X Uranium (URA) 5.82 percent, VanEck Gold Miners (GDX) 3.37 percent and VanEck Steel (SLX) 0.36 percent.
The 10-year Treasury yield dipped slightly to 0.93 percent on Monday. Had the 10-year Treasury yield risen above the 1 percent line, that would have been more of a positive influence on inflation-related and value stocks. The 10-year Treasury yield has been rising steadily as of late, and notably nearly doubled, since August. High-quality corporate bonds were the winner on Monday, with Fidelity Corporate Bond (FCOR) returning 0.16 percent.

Looking ahead for this week, consumer inflation data will be published on Thursday, while the newest producer inflation data will be released on Friday. Consumer prices held steady in October, while producer prices climbed at a slight boost of 0.3 percent. Crude oil prices increased in November and should push headline inflation back into positive growth over the month ahead.

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