Market Update: Fri, Nov 20, 2020 | LPL Financial Research

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Daily Insights

US markets open modestly mixed. US equities opened mixed this morning following Thursday’s afternoon rally. Investors bought equities Thursday on COVID-19 vaccine progress and an eventual economic turnaround, in spite of higher COVID-19 numbers and continued Washington gridlock on a stimulus plan.

LEI signals moderating pace of recovery. On Thursday, the Conference Board released its Leading Economic Index (LEI) report for October, and it showed the series rose 0.7% month over month. While this number still signals continued future economic growth, it reinforces the notion that the pace of the recovery is slowing. We examine the implications for future economic growth in the LPL Research Blog.

Technical update. Stocks rose throughout Thursday’s session, moving from modest losses to gains for domestic indexes. The S&P 500 Index advanced 0.4%, while the NASDAQ and Russell 2000 Index gained 0.9% and 0.8% respectively. Over the past two weeks, the S&P 500 has appeared to be forming a bullish flag formation—a bullish continuation pattern if the index can remain above last week’s lows at 3511 and break out to the upside. Overly optimistic sentiment bears watching though.

COVID-19 news. US cases hit another record Thursday, rising 21.5% over the prior week to more than 182,000. The weekly increase in the seven-day average slowed this week and stands at 24.5% (source: COVID Tracking Project).

  • Hospitalization growth remains slower than case growth after decelerating over the past 10 days; the seven-day average increased 21.2% over the past week.
  • Pfizer, in partnership with BioNTech, will apply for emergency-use authorization of its COVID-19 vaccine today.
  • California has imposed a 10 p.m. PT curfew on 94% of its residents.
  • The US Centers for Disease Control and Prevention (CDC) issued a “strong recommendation” on Thursday that Americans refrain from traveling for the holiday.

LPL Research in the Media

LPL Financial Chief Market Strategist Ryan Detrick was quoted in CNN Business discussing the huge rally in small caps.  Watch the interview here

 

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