Stocks slip, but S&P 500 still logs best month since April
Stocks pulled back slightly from their record levels Monday as Wall Street put a quiet coda on one of its most rocking months in decades.
The S&P 500 fell 0.5%, but the benchmark index still clocked a surge of 10.8% for the month, its biggest monthly gain since April. The Dow Jones Industrial Average, which has far less impact on 401(k) accounts than the S&P 500 does, had its best month since 1987.
The market’s slide on Monday followed reports showing how the worsening pandemic is dragging down the economy in the nearterm. But most investors are looking beyond that. The market’s strong November gains reflect Wall Street latching on to hopes that the economy will get closer to normal next year and strengthen in the long-term. That scenario hinges largely on promising coronavirus vaccines being rolled out in coming weeks and, eventually, leading to fewer new virus cases, which have been increasing.
“Today’s pullback in equities is a sidestep in a market that seems poised to trend higher,” said Terry Sandven, chief equity strategist at U.S. BankWealth Management. “We still think the market trends higher into the new year.”
The S&P 500 lost 16.72 points (0.5%) to 3,621.63. The Dow fell 271.73 (0.9%) to 29,638.64. The Nasdaq composite slipped 7.11 (0.1%) to 12,198.74. The S&P 500 and Dow are close to their record levels, and the Dow crested the
30,000 level last week for the first time.
The Russell 2000 index of smaller stocks, which closed out November with an 18.3% surge, fell 35.45 points (1.9%) to 1,819.82 on Monday.
Several big forces were behind November’s surge, beginning with the clearing of some of the uncertainty that had dogged markets leading into the U.S. elections. Now, Democrat Joe Biden is firmly in place as the president-elect in Wall Street’s eyes, and investors have avoided their worstcase scenario of weeks or months of limbo with an unknown winner.
Investors also found encouragement in prospects that Washington will remain under divided political control. Republicans are on track to hold onto control of the Senate if they can win one of two runoff elections in Georgia on Jan. 5. A split government would mean low tax rates and other pro-business policies could remain the status quo.
But the turbocharger for the market’s move higher has been a huge dose of hope as pharmaceutical companies come closer to delivering vaccines to a world beaten down by the COVID-19 pandemic. Several have reported encouraging data recently suggesting their vaccine candidates are highly effective.
Moderna said it would ask U.S. and European regulators Monday to allow emergency use of its COVID-19 vaccine. Its shares jumped 20.2% Monday.
Moderna follows Pfizer and German partner BioNTech in seeking to begin vaccinations in the U.S. in December. British regulators also are assessing the Pfizer shot and another from AstraZeneca.