Weekly Economic Update – December 21, 2020

In this week’s recap: A rollout for a COVID-19 vaccine led to a positive reaction from the markets; stimulus talks continue.

THE WEEK ON WALL STREET

Stocks climbed higher amid the COVID-19 vaccine rollout and an improving outlook for a fiscal stimulus bill.

The Dow Jones Industrial Average, which has lagged all year, gained 0.44%. The Standard & Poor’s 500 picked up 1.25% while the Nasdaq Composite index surged 3.05%. The MSCI EAFE index, which tracks developed overseas stock markets, rose 2.44%.1,2,3

Stocks Climb Higher

In a week that celebrated the national rollout of a COVID-19 vaccine, market enthusiasm was tempered by worries of infection caseload and fresh economic lockdowns.

Investors turned their focus to the fiscal stimulus negotiations in Washington, D.C., with the hope that a relief bill may be the bridge that gets the economy over its near-term troubles until vaccine distribution grows more widespread.

These negotiations were not smooth sailing. When a compromise bill appeared to gather support, markets quickly moved higher, with the Dow Jones Industrial Average, S&P 500, and NASDAQ Composite all setting new record high closes on Thursday.4

Stocks slipped in the final day of trading as stimulus hopes wavered.

Fed Outlook on Economy Improves

The Federal Reserve on Wednesday concluded its last meeting of the Federal Open Market Committee for 2020. Fed officials provided more detail for its monthly bond purchase program and reiterated their commitment to a monthly purchase of $120 billion of Treasury and mortgage-back securities until its inflation and employment goals are met.5

The Federal Reserve also raised its outlook on the U.S. economy. It revised its September forecast of a 3.7% decline in GDP in 2020 to a 2.4% decline, and increased its 2021 GDP growth forecast from 4.0% to 4.2%. It also expects unemployment at 2020 year-end would fall to 6.7%, substantially lower than its earlier estimate of 7.6%.6

Final Thoughts

Our weekly market commentary will not be published next week. We would like to take this moment to wish you and your family a safe and joyous holiday season.

TIP OF THE WEEK

Dropping a landline and just using your cell phone might save you money each year. For some, it’s a difficult legacy item to drop but 2021 might present a great opportunity.

THE WEEK AHEAD: KEY ECONOMIC DATA

Tuesday: Gross Domestic Product (GDP), Consumer Confidence, Existing Home Sales.
Wednesday: New Home Sales, Consumer Sentiment.
Thursday: Durable Goods Orders, Jobless Claims.

Source: Econoday, December 18, 2020

The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.

THE WEEK AHEAD: COMPANIES REPORTING EARNINGS

Tuesday: Cintas Corporation (CTAS), Carmax, Inc. (KMX).
Wednesday: Paychex, Inc. (PAYX).

Source: Zacks, December 18, 2020

Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.

QUOTE OF THE WEEK

“Education is not the filling of a pail, but the lighting of a fire.”- WILLIAM BUTLER YEATS

THE WEEKLY RIDDLE

What number logically comes next in this series:
2, 3, 5, 9, 17, __?

LAST WEEK’S RIDDLE:

At a class reunion, everyone shakes hands exactly once with every person present. That results in a total of 28 handshakes. In total, how many people are at the reunion?

ANSWER:

8 persons. (8 x (8 – 1): 2 = 28) or (7 + 6 + 5 + 4 + 3 + 2 + 1 = 28).

 

Greg R. Solis, AIF®
President and CEO

Bob Medler, CRPC®, CMFC®, AIF®
Wealth Advisor / Investment Analyst

Tiffany Valentine, CFP®
CERTIFIED FINANCIAL PLANNER™
Vice President | Director of Financial Planning

SOLIS WEALTH MANAGEMENT
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This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. The information herein has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.

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CITATIONS:

1. The Wall Street Journal, December 18, 2020
2. The Wall Street Journal, December 18, 2020
3. The Wall Street Journal, December 18, 2020
4. CNBC, December 17, 2020
5. The Wall Street Journal, December 16, 2020
6. CNBC, December 16,2020