by William Henderson, Vice President / Head of Investments
For the week that ended December 4, 2020, stocks reached further into record territory with the Dow Jones Industrial Average closing comfortably above 30,000, at 30,218. For the week, The Dow returned +1.1%, the Standard & Poor’s 500 Index returned +1.7%, and the NASDAQ returned +2.1%. The weekly gains piled onto previous gains to put year-to-date figures well into the positive zone. Year-to-date, the Dow has returned +5.9%, the S&P 500 +14.5%, and the NASDAQ a staggering +38.9%. These numbers are all the more remarkable when factored in to what 2020 threw at the markets: a global pandemic, a huge double-digit recession and a complicated and costly U.S. Presidential Election. 

Last week, news of European Union (EU) regulators considering emergency authorization for Pfizer/BioNTech’s COVID-19 vaccine for wide-spread release sparked a rally early only to be stymied later in the week after Pfizer acknowledged supply chain problems. The general flip-flop has plagued the markets all year. We get good news that is quickly followed by bad news. We’ve seen this with 1) the vaccine but increasing COVID-19 case abound; 2) a stimulus package is discussed but not passed by congress; 3) a decided presidential election but a run-off in Georgia for two senate seats. It should not be news to readers of this report that we always talk about one clear constant that the markets are relying on for support – the Federal Reserve. The Fed has lowered rates to zero, announced monetary policy steps to sure up the bond markets and stated over and over that it will provide all needed stability and liquidity to assure the economic recovery.

Sure, the news and economic reports are as negative as they are positive, but the markets seem to be seeing past this noise and looking to 2021 when a vaccine for COVID-19 could be widely available and distributed around the world. Consumers, who have been storing up cash, will then be released to spend again and we could see a very strong economic rebound following 2020. The larger macroeconomic risks that exist today make it more important than ever for investors to keep their goals front and center and stick with their investment plans. It is much better to focus on long-term results over full market cycles.