Nationwide’s Chief of Investment Research and the Nationwide Economics team offer daily and weekly commentary and analysis of the equity and bond markets, including an overview of economic data being released, global market news, commodities and market performance by index returns. These timely insights can help you navigate markets and understand emerging trends.
Pro-cyclical sectors continue to lead, including energy, industrials, materials and financials. This follows a strong month-to-date surge that drove the S&P 500® Index up 10%, led by small caps up 16% and developed international markets up 14%.
Retail sales grew by a modest 0.25 percent for October, by far the slowest pace since the reopening of state and local economies in May. The slowdown occurred across many categories, led by large declines at clothing, furniture, and department stores. This was the sixth consecutive month of gains in retail spending, however, as total sales have more than offset their losses from March and April during the government-mandated lockdowns.
Despite the turn of the calendar page, we anticipate the twists and turns of 2020 will be with investors into the new year. Positive developments on the vaccine front in November were encouraging, and we expect the good news to progress in 2021.
Equity markets rose to fresh records last week on optimism over coronavirus vaccines, but the good news was shadowed by record numbers of positive U.S. COVID-19 cases on Friday and renewed fears over a double-dip recession.
After a couple of months of strong-but-slowing growth, the economy picked up some steam in October as many indicators were better than anticipated. Third-quarter GDP growth shattered the previous record, private payrolls in October grew by more than the month prior, manufacturing strengthened again, and total home sales (September data) rose to their highest level since the first half of 2006. See Nationwide Economics’ take on what's happening and why this month in the economy.
Encouraging vaccine news continues to support pro-cyclical and value sectors, which have seen strong relative performance this month after a period of historic underperformance. Supporting this rotation is the prospect for additional stimulus, continued improvement in earnings, a historic valuation gap and the prospect for improving global trade under a Biden administration.
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