The market fell slightly last week as headlines arose over a possible increase in the size of stimulus checks. Employment data came in better than expected but remains on watch with the threat of a mutant COVID strain causing concerns over additional lockdown measures. Find all of this plus more on the additional economic data released last week.

Here are the top three things we’re covering this week’s blog:

The Market

The S&P was down 0.2% on the short trading week. With many institutional investors on vacation for the holidays, the market saw very low volume throughout the week. The major headline causing volatility last week was continued drama over the second stimulus package. Volatility came early on Monday with the market dropping nearly 2% in the first hour of the trading session. However, following the trend seen so often in 2020, the dip buyers came in strong and swiftly drove the market higher. From that point on the market remained relatively flat to close a short trading week.

Employment Data

New claims decreased last week to 803,000. Not only was this well below the expectations of 888,000, but it also broke the recent trend of rising new claims. Pandemic unemployment fell by nearly 57,000 to 397,000. This brings the total for new claims to 1.2 million, a meaningful drop from the previous week.

Continuing claims came in lower at 5.337 million. This will be a number to watch closely if a new stimulus package is passed with additional support for those on unemployment.

Total Claims for Unemployment from all programs came in at 20.36 million. With a second stimulus package set to be passed imminently, those who were forced to fall off regular state unemployment may once again be eligible. The result of this would likely be a jump in total claims.

Economic Data

New home sales fell unexpectedly in the month of November to an annualized rate of 841,000, well below the 995,000 estimated[1]. This especially came as a surprise because the housing market has been red hot in recent months. With that said, housing sales remain well above pre-pandemic levels and have shown considerable strength over other industries.

Personal spending tumbled further in November. This represented a month over month decrease of 0.40% as spending remained a weak spot. However, with a second stimulus bill bringing additional income to lower income individuals, this reading could see a boost higher.

Articles of Interest

Stimulus Bill Signed – After months of deliberation, the second stimulus bill has finally been passed by Congress and signed by the President. Nonetheless, there now appears to be a bi-partisan push to increase the $600 checks to $2000. Check out this article for the latest details on the stimulus bill and the checks still up for debate.

Mutant COVID Strain – Headlines arose earlier this month over a strain on the COVID virus that has mutated and spread throughout Europe. As a result, many are expecting that UK Prime Minister Boris Johnson may impose additional lockdown measures beginning in the new year. Check out this article for the specific actions that may be taken and the possibility of any additional spread.

Impact of Georgia Runoff – The market is currently riding the annual Santa rally and looking forward to easy comparisons in early 2021. While this time of year is historically bullish for equities, the upcoming Georgia runoff may cause some volatility. Check out this article for insight into the possible outcomes that could play a role in where the market trends in early 2021.

Social Media Post of the Week

We at Konvergent hope you and your family had a very happy holidays!

Don’t forget to follow us on your favorite Social Media Feeds!!

Bottom Line

The market fell slightly last week despite promising rumors around an increase in the size of the stimulus checks. With many large investors on vacation throughout the holidays, the market is unlikely to see any major moves unless triggered by an unexpected event. Looking ahead to 2021, we will soon begin to see the massive YoY comparisons over the recessionary data seen from the beginning of the pandemic.

If you have any questions about any of the information in this week’s blog or what you should be doing right now with your personal and business planning, do not hesitate to reach out to us by sending an email to info@konvergentwealth.com or calling us at 253-236-7000.


[1] https://www.msn.com/en-us/money/realestate/us-new-home-sales-unexpectedly-tumble-to-lowest-since-june/ar-BB1cbfE8

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