Weekly Market Performance – Small Caps Take Advantage of Holiday Cheer

Market Blog


Data is as of 11:15 AM ET

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US and International Equities

This week, concerns about a new COVID-19 strain in the United Kingdom along with new lockdown restrictions have weighed on the markets even as Congress passed COVID-19 relief.

The major market indexes are heading toward a mixed close this week. Compared to the Dow Jones Industrial and S&P 500 indexes, the Nasdaq Composite Index has been this week’s best performer so far, near flat at over 0.1%. The Nasdaq is up almost 44% for the year, putting it on track for its best annual return since 2003 (50%).

International markets sold off this week. Emerging markets (MSCI EM Index) underperformed their developed international counterparts (MSCI EAFE Index).

The financial and information technology sectors were this week’s top performers. Most sectors finished lower this week. Energy, communication services, and utilities were among the worst performers.

Small Caps Maintain Strength

For the third week in a row, small caps, as represented by the Russell 2000 Index, were among the week’s top performers. Following November’s strength, the Russell 2000 is up over 8% so far for the month of December, leading all the major indexes for the month.

Fixed Income, Currencies, and Commodities

Bonds, as represented by the Bloomberg Barclays US Aggregate, finished fractionally higher for the week. In addition, the 10-year Treasury note traded slightly higher as yields decreased. Most bond sectors traded in lockstep with the 10-year Treasury and Bloomberg Barclays US Aggregate.

Commodities across the board reversed last week’s positive momentum. Oil is currently in position to end its streak at six consecutive weekly gains. Natural gas, silver, copper, and gold all finished lower this week.

US and International Economic Data Recap

On Monday, Congress passed a $900 billion stimulus package. The bill includes over $200 billion in additional small business loans, individual stimulus checks, and 11 additional weeks of enhanced unemployment benefits. Given that recent economic data shows evidence of the US economic recovery slowing, the new stimulus efforts could help with the economic expansion efforts.

Sales of previously owned US homes declined last month for the first time in six months. This may signal that surging prices and a low supply could be curbing demand.   Median selling prices have risen over 14% year over year, potentially pricing some buyers out of the market.

December’s Consumer Confidence declined from November’s reading, missing analysts’ consensus estimate, and remains well below the pre-COVID-19 report in February 2020. Moreover, the labor market outlook in the survey worsened in December, which hasn’t happened since August, suggesting that the economy is losing steam.

This week, jobless claims halted their recent skid as slightly more than 800,000 Americans filed for unemployment insurance according to the US Department of Labor, ahead of the Bloomberg consensus estimate of 880,000. Continuing claims also beat expectations, with over 5.3 million remaining on unemployment versus the Bloomberg consensus estimate of over 5.5 million.

Looking Ahead

Economic data slated to be released next week includes:

  • On Tuesday, we get the October S&P/Case-Schiller Home Price Index.
  • Wednesday is all about November wholesale inventories, the December Chicago PMI index, and November Pending Home Sales.
  • Thursday provides investors another weekly initial unemployment claims report.

Have a happy and safe holiday!



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