Dow Falls, but Holds On for Best Month in Over Three Decades
November 30 2020 - 4:04PM
Dow Jones News
By Joe Wallace and Akane Otani
Stocks slipped Monday but closed out November with hefty gains,
capping a furious month-long rally fueled by bets that scientists
are closer than ever to finalizing Covid-19 vaccines to fight the
pandemic.
The market's momentum faded on the final trading day of
November, with all three major indexes ending lower.
But those losses didn't chip away much from stocks' performance
for the month. The Dow Jones Industrial Average rose 12%, marking
its best month since January 1987. The S&P 500 soared 11% for
its best showing since April, while the Nasdaq Composite climbed
12%.
With officials in the U.S. looking close to approving the
distribution of multiple vaccines, many money managers have bet
throughout the month that the economy will be able to recover lost
activity over the next year. Signs that President-elect Joe Biden
will make a relatively smooth transition into the White House have
also helped ease some of the political uncertainty that had fed
into heightened market volatility in the fall.
In a sign of investors' optimism, shares of companies that had
suffered most from the pandemic, such as energy producers,
cruise-line operators and banks, posted steep gains. Chevron
rallied 25% in November, posting its biggest monthly gain since
1980. Shares of small, U.S.-focused companies also outperformed the
broader market. The Russell 2000 index advanced 18% in November,
scoring its best-ever monthly gain.
The market's retreat Monday shows the rally isn't immune to
setbacks. Surging coronavirus infections in the U.S. and the
possibility for logistical hiccups in the distribution of the shots
could lead to further bouts of selling. And some investors wonder
what will fuel stocks higher from here, now that big question
marks, like the elections and the likelihood of a successful
vaccine, appear to be in the rearview mirror.
For the day, the Dow fell 271.73 points, or 0.9%, to 29638.64,
the S&P 500 slipped 16.72 points, or 0.5%, to 3621.63, and the
Nasdaq fell 7.11 points, or 0.1%, to 12198.74.
Still, many strategists expect that investors will ultimately
view any declines as a buying opportunity.
"We've got a lot of very good vaccine news," said Daniel Morris,
chief market strategist at BNP Paribas Asset Management. "We
should, for the most part, move up between now and the end of the
year, with a chance for a setback here or there.
Shares of drugmaker Moderna jumped $25.71, or 20%, to $152.74
Monday after saying it would ask U.S. and European health
regulators to authorize use of the company's Covid-19 vaccine.
IHS Markit rose $6.88, or 7.4%, to $99.46 after the data
provider said it would combine with S&P Global in a deal that
values IHS Markit at $44 billion, including debt. The all-stock
deal is the largest of the year.
One risk for stocks in the coming months stems from exuberance
among individual investors, said Trevor Greetham, head of multi
asset at Royal London Asset Management, pointing to surveys by the
American Association of Individual Investors. Still, the U.K. asset
manager is betting that a revival in economic activity will
continue to buoy stock prices in 2021.
The prospect of vaccines offers "some light at the end of the
tunnel as an investor," Mr. Greetham said. "If you're buying
stocks, you're not just assessing the next month or two -- you're
assessing the next 20 years."
In Asia, investors were rattled by a Reuters report that the
Trump administration is poised to add oil producer Cnooc and chip
maker Semiconductor Manufacturing International to a blacklist of
alleged Chinese military companies. Cnooc shares tumbled 14% in
Hong Kong, while SMIC's Hong Kong-listed stock fell 2.7%.
Most major markets in the region ended lower. Hong Kong's Hang
Seng lost 2.1%, Japan's Nikkei 225 retreated 0.8% and the Shanghai
Composite Index lost 0.5%.
Markets are concerned about more restrictions from the U.S. on
investing in Chinese companies, according to Steven Leung,
executive director of institutional sales at UOB Kay Hian in Hong
Kong.
"Some investors would rather stay on the sidelines awaiting more
clarity on vaccine developments and U.S. policy directions as the
nation transits to new leadership," Mr. Leung said.
Banks and energy producers dropped in Europe, weighing on the
Stoxx Europe 600, which finished down 1%.
--Joanne Chiu contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com and Akane Otani at
akane.otani@wsj.com
(END) Dow Jones Newswires
November 30, 2020 16:49 ET (21:49 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.