Written by: Sid Mohapatra
This week continues the theme of the markets toggling between positive vaccine-related
news with increasing COVID infection rates and daily new highs in outbreak numbers. At the
moment, it seems the stock market is fairly optimistic with the prospects of a swift recovery
in economic activity, consumption, and productivity. This is evidenced by the Dow Jones
skyrocketing 12% this month while crossing the significant 30,000 mark. The rise to 30,000
for the Dow Jones Industrial Average has come from depths of the pandemic lows and is
fueled by encouraging virus containment tools via vaccines. There continues to remain
significant uncertainty and challenges amid rising cases and renewed shutdowns across
North America, however, this healthy risk appetite is pricing in a Post-COVID rebound in
2021 and beyond.
Other indexes have also been gaining steadily with the S&P 500 as well as the Russell 2000
posted highs this week. Similarly, domestic markets have responded positively and were up
almost 2% in this risk-on environment with the TSX recovering from March lows. Trading
activity was cut short in the US on account of Thanksgiving and economic data releases
were fairly relaxed this week.
The TSX finished at 17,378 up 2.1% and posting a positive 1.8% on a YTD basis. Other
indexes also performed in a similar vein, with the S&P 500 closing at 3,638 an increase of
2.3% and a whopping 12.6% on a YTD basis.