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By Matthew
Klein | Friday, November 27 No
Sale on Stocks. After investors had Thursday off to
celebrate Thanksgiving—a decidedly different experience than normal thanks to
the pandemic—Black Friday’s abbreviated trading session brought U.S.
stock prices to new record highs. The S&P
500 index
was up a shade more than 0.2% while the tech-heavy Nasdaq
Composite was up 0.9%. The Russell
2000 small-cap index had underperformed the
S&P for most of this year until it soared more than 20% in November—the
biggest monthly gain on record—and was up 0.6% today. All three indices hit
new record highs. And why not?
Several effective vaccines are ready to be distributed, or will be soon.
Moreover, the economic data continue to be robust. The releases published on
Wednesday, which cover October, were uniformly positive: new
orders of capital goods are surging, manufacturing
exports are recovering briskly, the boom in
new home sales continues, and Americans’ total
wage and salary income is now less than 1% below the peak in
February. If the
economy is truly set to return to normal after a couple of years of extreme
disruption and death—while interest rates remain far lower than in the
past—then it would make sense to pay more than ever before to get a piece of
corporate America. Carnival
Corporation, which was one of the
biggest winners of the day, gaining 4.5%, is up nearly 60% this month. And it’s not
just America. Stock markets around the world were up on Friday, with Korea’s KOSPI
Composite hitting a new all-time high, and markets in
Canada and Europe nearly closing the gap with their pre-pandemic peaks. Optimism was
also reflected in the rising price of copper, especially relative to gold and
silver, which were both down. The price of Brent crude has gained 29% this
month after rising even more today, while U.S. large-cap energy stocks have
gained 34%. That’s the biggest one-month gain for the S&P energy sector
ever. Financials and industrials both had their best month since April, 2009. That said,
it isn’t all good news. For one thing, the pace of growth is still slowing.
Moreover, things could get worse before they get better, especially as
federal government income support
is withdrawn and as the rate of new coronavirus infections
skyrockets. But stock investors look years into the future, not months. As
long as the pre-pandemic world remains within reach, it will be tough to be
bearish for too long. Watch our TV
show on Fox Business Fridays at 10 p.m. or 11:30 p.m. ET; Saturdays at 10
a.m. or 11:30 a.m.; or Sundays at 7 a.m., 10 a.m., or 11:30 a.m. This week,
Nobel Laureate Richard Thaler on how to avoid common mistakes in managing
your finances. Plus, more personal finance insights for the year ahead. |
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DJIA: +0.13% to 29,910.37 The Hot
Stock: Etsy +10.7% Best Sector:
Health Care +0.9% |
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