Book Closes on 2020 with Solid Yearly Gains and New Records…..

U.S. equities wrapped up the final session of 2020 on a high note, with the Dow and S&P 500 posting new records amid subdued volume globally as a plethora of markets were closed or traded in abbreviated sessions. The markets were resilient after bouncing back sharply from the severe disruption of the COVID-19 pandemic, courtesy of the rollout of multiple vaccines and the massive unprecedented responses in the form of global monetary and fiscal policies. However, shortly after 2021 begins, the markets will have to contend with the outcome of the key Georgia Senate runoff elections. The final data point of 2020 showed the pace of weekly initial jobless claims slowed but remained uncomfortably elevated. Treasuries were modestly higher, pressuring yields, in a shortened session for the bond markets, the U.S. dollar modestly bounced off of lows not seen since the Spring of 2018, while gold and crude oil prices nudged higher. Europe finished lower, adding to a 2020 decline, while markets in Asia were mixed.

The Dow Jones Industrial Average rose 197 points (0.7%) to 30,606, the S&P 500 Index was up 24 points (0.6%) at 3,756, while the Nasdaq Composite was 18 points (0.1%) higher at 12,888. In moderate volume, 807 million shares were traded on the NYSE and 4.7 billion shares changed hands on the Nasdaq. WTI crude oil was $0.12 higher at $48.52 per barrel and wholesale gasoline was up $0.01 at $1.41 per gallon. Elsewhere, the Bloomberg gold spot price gained $6.07 to $1,900.46 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—added 0.3% to 89.94. For the year, the DJIA rose 7.3%, the S&P 500 Index gained 16.3%, and the Nasdaq Composite jumped 43.6%.

As a tumultuous 2020 ends, the U.S. stock markets finished solidly higher for the year. The advance was led by the Information Technology, Consumer Discretionary and Communications Services sectors, with these groups posting year-to-date gains of 42.2%, 32.1% and 22.2%, respectively. Although clawing back some losses in the wake of multiple COVID-19 vaccines being distributed in Q4, Energy, Real Estate and Financials sectors saw yearly drawdowns of 37.3%, 5.2% and 4.1%, respectively.

The last data point of 2020 shows jobless claims decelerated but remain painfully elevated…..

Weekly initial jobless claims came in at a level of 787,000 for the week ended December 26, below the Bloomberg consensus estimate of 835,000, and compared to the prior week’s upwardly-revised 806,000 level. The four-week moving average rose by 17,750 to 836,750, while continuing claims for the week ended December 19 fell by 103,000 to 5,219,000, south of estimates of 5,370,000. The four-week moving average of continuing claims fell by 77,000 to 5,457,250.

Treasuries were mostly higher, as the yield on the 2-year note was little changed at 0.12%, while the yields on the 10-year note and the 30-year bond dipped 1 basis point to 0.92% and 1.65%, respectively. The U.S. Dollar Index was down 6.7% for the year, touching levels not seen since the Spring of 2018.

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