Friday, November 26, 2021
U.S. and International Equities
Major Markets Lower
The major equity markets finished the week lower as markets gave up ground Friday during a holiday-shortened trading session given new COVID-19 variant concerns in South Africa. Friday’s market decline, with the Dow Jones off nearly 1,000 points, is the worst pullback so far in 2021. Consumer staples led the week as traders moved toward a defensive posture.
International equities, as represented by the MSCI EAFE Index and MSCI Emerging Markets Index, lost ground for the second straight week on both COVID-19 variant concerns as well as COVID-19 cases rebounding in Europe. Concerns over China’s continued regulatory crackdown and its economic trajectory also weighed on investor sentiment.
Friday’s Rally Leaves High Quality Bonds Little Changed for the Week
The Bloomberg Aggregate Bond Index finished little changed as losses early in the week on inflation concerns were erased on Friday as high-quality bonds surged on the flight-to-safety trade. High-yield corporate bonds, as tracked by the Bloomberg Barclays High Yield index, sold off for the third straight week.
Most Commodities Followed the Equity Markets Lower
Natural gas prices rallied again this week. However the commodity is still off over 10% over the last month. Oil dropped over 6% for the week, and is down almost 16% over the last month, amid weekly inventory data showing a greater supply build than anticipated. Both gold and silver pulled back for the second straight week after two consecutive higher weeks for the metals.
Economic Weekly Roundup
The November Federal Open Market Committee (FOMC) meeting minutes showed rising concerns about inflation. In addition, the minutes reported that FOMC members would be willing to increase interest rates if prices continue to rise, if needed. Moreover, given the present economic progress the Fed would continue the current pace of tapering at least through December, but would consider increasing the pace in 2022 if merited. That would put the Fed on pace to end purchases in late spring or early summer of next year.
Unemployment Claims Reach a 50-Year Low
Jobless claims reached a new 50-year low of under 200,000 amid continued improvement in the job market, though claims were depressed by quirky seasonal adjustments that will likely reverse in coming weeks. Still, the reading came in well below both Bloomberg’s consensus forecast as well as the prior week’s claims. The reading even beat the pre-pandemic trend of around 210,000 Continuing claims, which were calculated the week prior to initial filings, fell slightly to just below 2.05 million, which surpassed the prior week but came in above the consensus forecast of 2.032 million.
In addition, the below economic data was reported this week:
- Third quarter GDP was revised slightly higher to 2.1%, just below economists’ consensus.
- Durable goods orders declined to 0.5% in October, which was in line with economists’ expectations, but rose 0.5% excluding transportation orders.
The following economic data is slated to be released during the week ahead:
- Monday: October pending home sales
- Tuesday: September Federal Housing Finance Agency (FHFA) and S&P Case-Schiller home price indexes, November consumer confidence
- Wednesday: November ADP employment survey, Markit Purchasing Managers’ Index (PMI), Institute for Supply Management (ISM) manufacturing report, Federal Reserve Beige Book
- Thursday: Weekly initial and continuing unemployment claims
- Friday: October durable and factory orders, November Bureau of Economic Analysis total light vehicle sales, Purchasing Managers’ Index composite, Institute for Supply Management (ISM) non-manufacturing index, November employment report
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. All market and index data comes from FactSet and MarketWatch.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities. All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
U.S. Treasuries may be considered “safe haven” investments but do carry some degree of risk including interest rate, credit, and market risk. Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
For a list of descriptions of the indexes referenced in this publication, please visit our website at lplresearch.com/definitions.
This Research material was prepared by LPL Financial LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC).
Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
- Not Insured by FDIC/NCUA or Any Other Government Agency
- Not Bank/Credit Union Guaranteed
- Not Bank/Credit Union Deposits or Obligations
- May Lose Value
For Public Use – Tracking # 1-05216879