By Joe Wallace 

U.S. stocks are on track to complete a banner November, giving the Dow its best month in over 33 years, as investors cheer the prospect of Covid-19 vaccines halting the pandemic and fresh stimulus spending to bolster the economy.

Futures tied to the Dow Jones Industrial Average ticked down 0.5% Monday, signaling that the blue-chips index will enter the final trading session of November on a muted note. The benchmark was up roughly 12.9% month-to-date by the end of Friday.

Contracts linked to the S&P 500 slipped 0.4% at the start of the week, while technology-heavy Nasdaq-100 futures were largely flat, suggesting that stocks across the board are likely to take a breather after last week's sharp rally. The S&P 500 and Nasdaq Composite remain on track for what may be their biggest monthly advance since April.

Stocks have soared in November, at one point pushing the Dow over 30000 for the first time and putting the benchmark on course for potentially its biggest one-month advance since January 1987. Shares in companies that had suffered most from the pandemic, such as energy producers and banks, have posted steep gains.

The Russell 2000 index of small-cap stocks is also on pace for its best month in data going back to 1987.

Two main factors have fueled the latest leg up in markets, according to investors. The development of three vaccines in the West has opened up the possibility that the economic disruption caused by the coronavirus will end in 2021. Signs that President-elect Joe Biden will make a relatively smooth transition into the White House have doused some of the political uncertainty that had fed into heightened market volatility in the fall.

The looming rollout of vaccines is likely to keep stocks on an upward trajectory in the final weeks of the year, investors and analysts said.

The surge of coronavirus infection in the U.S. and the possibility for logistical hiccups in the distribution of the shots could lead to bouts of selling. Still, money managers expect investors to view any declines as a buying opportunity.

"We've got a lot of very good vaccine news," said Daniel Morris, chief market strategist at BNP Paribas Asset Management. "We should, for the most part, move up between now and the end of the year, with a chance for a setback here or there.

One risk for stocks in the coming months stems from exuberance among individual investors, said Trevor Greetham, head of multi asset at Royal London Asset Management, pointing to surveys by the American Association of Individual Investors. Still, the U.K. asset manager is betting that a revival in economic activity will continue to buoy stock prices in 2021.

The prospect of vaccines offers "some light at the end of the tunnel as an investor," Mr. Greetham said. "If you're buying stocks, you're not just assessing the next month or two -- you're assessing the next 20 years."

Ahead of the bell in New York, shares in S&P Global fell 2% after The Wall Street Journal reported that the data provider is nearing a deal to acquire IHS Markit for about $44 billion. The all-stock deal, which at that price would be the largest of the year, could be announced as soon as Monday. Shares in IHS Market jumped 8%.

In bond markets, the yield on 10-year Treasurys ticked up to 0.844%, from 0.841% on Friday.

Brent-crude futures fell 2% to $47.27 a barrel, after reports that ministers from the Organization of the Petroleum Exporting Countries and its allies were yet to agree on delaying a boost to production in January ahead of meetings Monday and Tuesday.

Traders broadly expect the cartel to extend output curbs into 2021 to bolster prices amid surging virus cases in the U.S. and restrictions on travel in Europe.

In Asia, investors were rattled by a Reuters report that the Trump administration is poised to add oil producer Cnooc and chip maker Semiconductor Manufacturing International to a blacklist of alleged Chinese military companies. Cnooc shares tumbled 14% in Hong Kong, while SMIC's Hong Kong-listed stock fell 2.7%.

Most major markets in the region ended lower. Hong Kong's Hang Seng lost 2.1%, Japan's Nikkei 225 retreated 0.8% and the Shanghai Composite Index lost 0.5%.

Markets are concerned about more restrictions from the U.S. on investing in Chinese companies, according to Steven Leung, executive director of institutional sales at UOB Kay Hian in Hong Kong.

"Some investors would rather stay on the sidelines awaiting more clarity on vaccine developments and U.S. policy directions as the nation transits to new leadership," Mr. Leung said.

Banks and energy producers dropped in Europe, leading the Stoxx Europe 600 down less than 0.1%. Shares in UniCredit fell 4.1% on reports that the board was holding talks about governance at the Italian bank.

--Joanne Chiu contributed to this article.

Write to Joe Wallace at Joe.Wallace@wsj.com

(END) Dow Jones Newswires

November 30, 2020 05:48 ET (10:48 GMT)

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