Stocks Lower On the Day, But Sharply Higher For the Month…..

U.S. stocks wrapped up the month of November by finishing mostly lower. This comes following a month that saw stocks surge, as the S&P 500 had its best month since April and the Dow posted its best one month increase in decades. Much of November’s rally had largely been driven by vaccine optimism and today brought about further encouraging news, as Moderna announced trial data suggesting high efficacy rates. However, the markets shrugged off the positive vaccine news, as well as the biggest M&A announcement of the year, as S&P Global agreed to acquire IHS Markit for $44 billion. In other equity news, Nikola fell sharply after the company received a modified partnership agreement with General Motors. A busy economic week got underway with mixed results, as Chicago and Dallas manufacturing reports both declined more than expected but remained comfortably in expansion territory, while pending home sales unexpectedly declined for a second-straight month. Treasury yields were mixed, and the U.S. dollar turned higher. Gold and crude oil prices were lower. Asia finished lower, despite some upbeat Chinese November business activity data, and Europe closed lower.

The Dow Jones Industrial Average dropped 272 points (0.9%) to 29,639, the S&P 500 Index declined 17 points (0.5%) at 3,622, and the Nasdaq Composite decreased 7 points (0.1%) to 12,199. In heavy volume, 1.8 billion shares were traded on the NYSE and 7.5 billion shares changed hands on the Nasdaq. WTI crude oil was $0.19 lower at $45.34 per barrel and wholesale gasoline lost $0.03 to $1.24 per gallon. Elsewhere, the Bloomberg gold spot price fell $11.47 to $1,776.32 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—increased 0.2% to 92.01.

With the holiday-shopping season underway on the heels of the Black Friday weekend, consumer spending was in focus amid the pandemic and as today is Cyber Monday—the busiest e-commerce day of the year. Physical traffic was down sharply over Black Friday due to the impact of the COVID-19 pandemic, but Adobe Analytics is projecting online sales today to surge 35% year-over-year (y/y) to a record $12.7 billion.

Despite a down final session of the month, the markets still posted sharp November gains, bolstered by optimism that multiple COVID-19 vaccines could foster a faster pace of economic recovery, which has boosted economically-sensitive stocks and sectors that have underperformed. Clarity on the composition of President-elect Joe Biden’s administration has also been received positively on the Street.

Regional manufacturing and housing data mixed to begin busy week

The Chicago PMI slowed more than expected but remained at a level depicting expansion (a reading above 50). The index declined to 58.2 in November from October’s 61.1 level, and versus the Bloomberg consensus estimate calling for a dip to 59.0. New orders and production both expanded at slower rates but the contraction in employment decelerated.

The November Dallas Fed Manufacturing Index declined more than expected but remained in expansion territory (a reading above zero). The index decreased to 12.0 from 19.8 in October and compared to forecasts of a decline to 14.3.

Pending home sales unexpectedly declined, falling 1.1% month-over-month in October, versus estimates calling for a 1.0% gain after September’s 2.0% drop. Sales were 19.5% higher y/y, compared to September’s 22.2% increase. Pending home sales reflect contract signings and are a gauge of the pipeline of existing home sales.

Treasuries were mixed, as the yield on the 2-year note fell 1 basis point (bp) to 0.15%, the yield on the 10-year note ticked 1 bp higher to 0.85%, while the yield on the 30-year bond was little changed at 1.57%.

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