Weekly Recap | Thanksgiving Week 2021

November 22-26, 2021 Recap

Post-Thanksgiving Day Selloff

Stocks Tumble
Global stocks retreated last week amid reactionary fears over a warning of a newly discovered COVID-19 variant. The World Health Organization (WHO) said late Thursday that the South African strain, dubbed “omicron,” poses the latest threat to slow the global spread of COVID-19. Friday’s half-day session was the worst post-Thanksgiving Day performance for the S&P 500 since 1941. Travel and leisure stocks fell the most on Friday, while stay-at-home themed companies rallied.

For the Week…
Among the three major U.S. equity indices, the S&P 500 fell 2.18%, the Dow Industrials shed 702 points (905 points on Friday) for a net 1.97% loss and the tech-heavy Nasdaq Composite suffered the largest pullback, down 3.52%. The small cap-focused Russell 2000 had an even deeper weekly selloff, down 4.13%.

Consumer Sentiment Declines
Consumer sentiment eroded sharply in November on inflationary pressures. The University of Michigan’s final November sentiment reading fell to 67.4 from 71.7 the month prior. One-in-four survey respondents noted a decline in living standards as a result of inflation and see spending cutbacks in the coming months.

Energy is the Only Gainer
10 of the 11 major S&P 500 sector groups ended negative last week, with Consumer Discretionary (-3.61%), Communication Services (-3.25%) and Technology (-3.23%) falling the most. Financials (-0.58%) and Consumer Staples (-0.21%) declined the least while Energy (+1.66%) outperformed on strong early week gains. Energy fell the most on Friday, down just over 4%.

Treasury Prices Climb
On Friday, Treasury prices jumped on safe-haven buying, sending yields down the most since March 2020. Yet for the week, the yield on benchmark 10-year Treasury notes declined just six basis points lower (-0.06%) to 1.477%. The U.S. Dollar Index strengthened for a fifth consecutive week, albeit up just 0.06%. U.S. WTI crude oil futures were down 10% last week, ending Friday at $68.15/barrel.

Under the Hood of the Indices

Recently there is a large divergence happening inside some of the large indices. Specifically in the Nasdaq, we are seeing higher prices even though the majority of stocks making up the index are down. This is due to the weight of the 10 largest stocks being over 40% of the index.  As a general rule of thumb this is a sign of waining market momentum; however, this is a trend that's been propelling new all-time highs consistently over the last several years. Check out this chart depicting the number stocks making gains versus the number making declines relative to the overall Nasdaq price. 

The Latest from @CeteraIM

Recovery Still Steady

Wages Pop Higher

Thanksgiving Dinner Inflation Tops 14%

Economic Calendar

Monday, November 29
Pending Home Sales.

Tuesday, November 30
Case-Shiller Home Prices, MNI Chicago PMI, Consumer Confidence.

Wednesday, December 1
Mortgage Applications, ADP Private Payrolls, ISM & IHS Markit Manufacturing PMIs, Construction Spending, Fed Beige Book.

Thursday, December 2
Jobless Claims, Continuing Claims.

Friday, December 3
Nonfarm Payrolls, Unemployment Rate, ISM & IHS Markit Services PMIs, Durable Goods Orders.

Initial jobless claims plummeted to a multi-decade low of 199,000, easily beating the consensus expectation of 264,000 for the week ending November 20. The last time initial jobless claims were this low was 1969. For perspective, weekly initial jobless claims peaked at more than 6 million in April 2020. While seasonal adjustments may partially explain the large drop in claims, it is still an encouraging sign for the labor market recovery.

^{This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.}

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^Glossary

^{The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.}

^{The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.}

^{The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.}

^{The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.}

^{The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.}

^{The Bloomberg Barclays US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.}

^{The Bloomberg Barclays US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.}

^{The Bloomberg Barclays US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.}

^{The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.}

^{The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.}

^{The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.}

^{The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.}

^{The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.}

^{The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.}