Stocks struggled in the final session of November, but Monday's losses weren't nearly enough to take the shine off an incredibly productive month for investors.
Today's declines came in the face of numerous pieces of welcome news. Moderna (MRNA, +20.2%) announced final trial data for its vaccine, showing zero severe cases of COVID-19 among those vaccinated; the firm says it will now apply for an Emergency Use Authorization from the U.S. Food & Drug Administration.
Also, President-elect Joe Biden confirmed that he will nominate former Federal Reserve Chair Janet Yellen to be his Treasury Secretary.
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One drag on the market, however, involved more potential conflict with China, as President Donald Trump's administration announced it would add two more Chinese firms to a growing blacklist.
The Dow Jones Industrial Average, off 0.9% to 29,638, nonetheless finished November with an 11.8% gain, its best single-month gain since January 1987.
Other action in the stock market today:
- The tech-heavy Nasdaq Composite delivered the same 11.8% monthly improvement after it closed Monday down 0.1% to 12,198.
- The S&P 500, off 0.5% to 3,621 today, nonetheless finished November with a 10.8% advance.
- The Russell 2000 retreated by 1.9% to 1,819, but that still left the small-cap index up 18.3% for the month.
- U.S. crude oil futures declined 1.3% to $44.97 per barrel.
- Gold futures settled at $1,768.40 per ounce, or a 0.8% decline.
A Difficult December Ahead?
What comes next might not be as fruitful.
For one, history isn't on December's side. Sam Stovall, chief investment strategist at CFRA, says in an email that "history warns, but does not guarantee, that December's advance could be subdued" and provides a couple of historical data points nodding at a lackluster month ahead:
"Whenever the S&P 500 gained 5% or more in November, which happened 14 times since 1945, December's price rise and frequency of advance were below average," he writes.
"Also, last week saw the DJIA, S&P 500, and Russell 2000 record simultaneous new all-time highs. There have been more than 200 other such occurrences of simultaneous new highs since 1979 when the Russell 2000 was first introduced. In the subsequent 22 trading days (approximately one calendar month), the S&P 500 recorded a flat price change, on average, versus the more normal average gain of 0.71%, and rose in price only 50% of the time, versus the typical 63% frequency of advance."
More tangibly, Jeffrey Buchbinder, equity strategist at LPL Financial, points out that "if (COVID) cases continue to rise, we likely will see greater action by local governments to limit high-risk activities, which may further threaten the economic recovery." It should be noted, however, that LPL still predicts "stocks are in the early stages of a new bull market."
For the moment, if your goal is to lighten your risk, you can look for guidance in several areas of the market. These 15 dividend payers, for instance, suffer from troubling fundamentals that might point to weakness ahead, while these nine stocks are looked down upon by the analyst set.
You can also observe the comings and goings of Wall Street's so-called smart money – billionaires, hedge funds and other institutional investors who have recently released their portfolios' latest transactions. We've evaluated 25 stocks that billionaires cut down on or cut out altogether in Q3 to determine just how instructive these moves should be: In some cases, they reflect faltering outlooks, but, in others, it looks like prudent profit-taking in otherwise high-quality stocks that the smart money still owns in spades.
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