Week In Review: Stock Rally Takes Pause As COVID-19 Cases Surge

The recent stock rally took a pause last week as rising COVID-19 infections and slow progress on an economic relief bill loomed over markets.

The Dow Jones Industrial Average dipped 0.57%, while the Standard & Poor’s 500 dropped 0.96%. The Nasdaq Composite index fell 0.69% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, declined 0.05%.^1,2,3

Last Week: Stimulus Stalls, Stocks Stumble

The market grappled all week with worries over rising COVID-19 cases and the economic restrictions that followed. Nevertheless, there were moments of optimism— such as the starting of vaccinations in the U.K.— that drove markets to record highs.⁴

But gains could not be sustained as an agreement on a fiscal stimulus bill remained elusive and daily news regarding COVID-19 cases undermined investor sentiment.

Markets were also challenged by having to absorb a number of new and secondary stock offerings last week, including two high-profile technology IPOs. The Energy sector continued its strong run, while small and mid-cap stocks posted another week of positive performance.⁵

This Week: COVID-19 Vaccine Rollout Begins 

The first dose of Pfizer (PFE) and BioNTech’s (BNTX) COVID-19 vaccine were administered to Americans on Monday, after the Food and Drug Administration granted emergency use authorization for American's age 16 and older late Friday evening.⁶

As distribution efforts for the vaccine reach full steam, investors are cautiously optimistic that a return to normal could be on the horizon. The markets have rallied on vaccine progress since early November and it seems plausible that as inoculation begins in the US the recent rally could be supported into 2021.  Although there is great reason to be hopeful following these recent developments, we still believe investors should observe caution and remain disciplined within their portfolios as uncertainties around the virus still persist. 

^{Source: Yahoo Finance, December 14, 2020} 

Key Economic Data

Tuesday: Industrial Production.

Wednesday: Retail Sales, Federal Open Market Committee (FOMC) Announcement.

Thursday: Housing Starts, Jobless Claims.

Friday: Index of Leading Economic Indicators.

^{Source: Econoday, December 11, 2020}

Companies Reporting Earnings

Thursday: General Mills (GIS)

Friday: Darden Restaurants (DRI)

^{Source: Zacks, December 11, 2020}

Year-End Tax Tips

2020 is almost over, which means it’s time to start wrapping up those taxes for the year! There are lots of things to do to prepare for 2021. Here are some year-end tax tips to consider:

• If you think you will be in the same or a lower tax bracket next year, it may be beneficial to defer income until 2021. This could include self-employment income or year-end bonuses.
• You may be able to take some last-minute tax deductions, such as controlling when you contribute to charity. 
• If you have yet to do so this year, you might want to consider making a contribution to an Individual Retirement Account (IRA). Since specific rules and limitations govern these types of accounts it is recommended that you seek the advice of an investment advisor and qualified tax professional prior to making any contributions. 

The end of the year is the perfect time to talk with your tax professional on how to position yourself for 2021. 

* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.

Tip adapted from Turbo Tax⁷ 

Ways to Give Back This Season

The holiday season is a time to give back to our community. There are many service opportunities available, whether you seek out ones in your community or give back on your own. Here are some ideas:

• Bake cookies or casseroles and pass them out at the local fire departments, police stations, hospitals, or to elderly neighbors or those in need.
• Pack stockings for homeless people in your community. Include helpful goodies like water bottles, granola bars, hand sanitizer, toothpaste and a toothbrush, or warm gloves.
• Clean out the toy box with your child or grandchildren and donate some toys or games that they don’t play with anymore. This is a great learning lesson for little ones!
• “Adopt a family” during the holiday season and help them out with gifts or necessities. Churches and other local organizations often have a program where you can find families in need and help them out.
• Donate to a food bank. You can either shop for nonperishables or donate your time!

Tip adapted from US News and World Report8

Footnotes and Sources

^{1. The Wall Street Journal, December 11, 2020}

^{2. The Wall Street Journal, December 11, 2020}

^{3. The Wall Street Journal, December 11, 2020}

^{4. USAToday.com, December 8, 2020}

^{5. CNBC.com, December 10, 2020}

^{6. Yahoo Finance, December 14, 2020}

^{7. Turbotax.intuit.com, December 11, 2020}

^{8. Money.usnews.com, December 11, 2020}

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

^{The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.}

^{The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.}

^{The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.}

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