New highs are close. Stocks opened higher in the United States as the S&P 500 Index could reach new all-time highs today, with Europe up big and gains in Asia as well. It’s a quiet news day, with hope that Congress will deliver on the next stimulus bill, better trends showing for COVID-19, and earnings season wrapping up one of the better seasons relative to expectations ever.
Win streaks in the air. The S&P 500 has gained for seven days in a row, the longest win streak since eight in a row in April 2018. In fact, not once during the seven-day win streak did the index gain more than 1%, the first time since October 2017 it has done that. Also, the Technology Select Sectors SPDR Fund (XLK) hasn’t been down three days in a row since early March. This computes to a record 107 trading days in a row without a three-day losing streak, topping the previous record of 106 days in April 2017. This shows how historic this run in technology has been.
Real yields on Treasuries remain very low. With real yields—based on US Treasury yields minus core consumer price inflation—investors are currently accepting negative returns after inflation on Treasuries across most of the yield curve. We continue to recommend an underweight allocation to Treasuries in fixed-income allocations.
Bond returns and Congress. In the past we’ve explored the trend of equity market returns and party makeup of the president and Congress, so we wanted to take a look at the potential impact to the other side of a conventional asset allocation. We investigate the returns of the bond market under various partisan regimes later today on the LPL Research blog.
COVID-19 news. New daily cases in the United States tumbled 15.6% on Monday compared with the prior week, while the seven-day average fell 12.5% to 52,300—the lowest since July 8. Hospitalizations have fallen to the lowest level since July 9 and continue to fall steadily (source: The COVID Tracking Project). Global cases surpassed 20 million after doubling in six weeks (source: Johns Hopkins). Russia President Vladimir Putin said Russia has registered the first COVID-19 vaccine. New Zealand reported its first local case in 102 days, according to Bloomberg.
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