Dow Falls, But Remains on Track for Best Month in Over Three Decades
By Joe Wallace and Akane Otani
Stocks slipped Monday but held on to hefty gains for the month,
capping a furious November rally fueled by investors' bets that
scientists are closer than ever to finalizing Covid-19 vaccines to
fight the pandemic.
The market's momentum faded on the final trading day of
November, with the Dow Jones Industrial Average falling 380 points,
or 1.3%, to 29528 in the afternoon.
But even with Monday's slide, stocks remain on track for
historic gains. The blue-chip average is up nearly 12% for the
month, which would mark its biggest gain since January 1987. The
S&P 500 is headed for a 10% gain and the Nasdaq Composite is up
11% for the month.
With officials in the U.S. looking close to approving the
distribution of multiple vaccines, many money managers are betting
on the economy being able to recover lost activity over the next
year. Signs that President-elect Joe Biden will make a relatively
smooth transition into the White House have also helped ease some
of the political uncertainty that had fed into heightened market
volatility in the fall.
In a sign of investors' optimism, shares of 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 on pace for its best month since its 1984 inception.
Monday's stock slide shows the market rally isn't immune to
setbacks. Surging coronavirus infections in the U.S. and the
possibility for logistical hiccups in the distribution of the shots
could lead to further bouts of selling. And some investors wonder
what will fuel stocks higher from here, now that big question
marks, like the elections and the likelihood of a successful
vaccine, appear to be in the rearview mirror.
Still, many strategists expect that investors will ultimately
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.
Shares of drugmaker Moderna jumped 16% Monday after saying it
would ask U.S. and European health regulators to authorize use of
the company's Covid-19 vaccine.
IHS Markit rose 7.3% after the data provider said it would
combine with S&P Global in a deal that values IHS Markit at $44
billion, including debt. The all-stock deal is the largest of the
Shares of oil-and-gas companies declined broadly alongside crude
prices, chipping into outsize gains for the month. The S&P 500
energy sector remained up 29% for November, despite falling 3.7%
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."
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
"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, weighing on the
Stoxx Europe 600, which finished down 1%.
--Joanne Chiu contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com and Akane Otani at
(END) Dow Jones Newswires
November 30, 2020 14:57 ET (19:57 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.