The Dow rallied 11.8% in November, posting its best one-month performance since January 1987. The S&P 500 and Nasdaq Composite rose 10.8% and 11.8%, respectively, for their strongest monthly advances since April.
November’s rally came amid a slew of positive coronavirus vaccine news, which lifted hope of a strong economic recovery and sparked a surge in beaten-down value names. The iShares Russell 1000 Value ETF (IWD) rallied 13.4% for the month, and outpaced its growth counterpart, the iShares Russell 1000 Growth ETF (IWF) by 3 more than percentage points.
“Vaccine news has further buoyed spirits with several therapeutic/preventative lights now at the end of the pandemic tunnel being another set of positive data points,” wrote Tobias Levkovich, chief U.S. equity strategist at Citi. However, he added investors may be getting too complacent about the risks the market still faces.
At this point, the market is either “anticipating an even stronger 2021 profits outlook possibly tied to rapid inoculation-driven recovery and continued corporate cost containment, or the S&P 500 may be ahead of itself in the near term, particularly when considering no new short-term fiscal stimulus and the impact of second wave outbreaks,” Levkovich said.
Data compiled by Johns Hopkins University shows that more than 13 million Covid-19 cases have been confirmed in the U.S. along with over 266,000 deaths. In New York, Gov. Andrew Cuomo said the state was implementing emergency hospital measures as cases continue to rise.
Meanwhile, Federal Reserve Chairman Jerome Powell called the U.S. economic outlook “extraordinarily uncertain.”
“The rise in new COVID-19 cases, both here and abroad, is concerning and could prove challenging for the next few months,” Powell said in prepared remarks. “A full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities.”
Shares of Zoom Video fell 5.09% in after-hours trading despite the video-conferencing giant reporting better-than-expected earnings for the third quarter. Tesla’s stock popped 4.32% after S&P Dow Jones Indices said the electric-car maker will be added to the S&P 500 on Dec. 21 in a single step.