Stocks retreated last week on rising COVID-19 infections and slow progress on an economic relief bill. The Dow Jones Industrial Average dipped 0.57%, while the Standard & Poor’s 500 dropped 0.96%. The Nasdaq Composite index fell 0.69% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, declined 0.05%.1,2,3
Stimulus Stalls, Stocks Stumble
The market grappled all week with worries over rising COVID-19 cases and the economic restrictions that followed. Nevertheless, there were moments of optimism— such as the starting of vaccinations in the U.K.— that drove markets to record highs.4
But gains could not be sustained as an agreement on a fiscal stimulus bill remained elusive and daily news regarding COVID-19 cases undermined investor sentiment.
Markets were also challenged by having to absorb a number of new and secondary stock offerings last week, including two high-profile technology IPOs. The Energy sector continued its strong run, while small and mid-cap stocks posted another week of positive performance.5
A “No-Deal” Brexit More Likely
The prospects of an agreement to manage Britain’s exit from the European Union by year end dimmed as the two parties failed to narrow their differences in a meeting held last week.6
Though primarily a European issue, a no-deal Brexit may hold consequences for U.S. businesses and investors. The failure to reach an agreement has the potential to disrupt an already fragile supply chain and cause issues in the financial markets. A supply chain disruption may weaken European economies (e.g., Germany) that are important to American companies. Another consequence may be a stronger U.S. dollar, which would make American exports more expensive and less competitive.
Little time remains in striking an agreement since the prevailing framework ends December 31, 2020.
Year-End Tax Tips
2020 is almost over, which means it’s time to start wrapping up those taxes for the year! There are lots of things to do to prepare for 2021. Here are some year-end tax tips to consider:
The end of the year is the perfect time to talk with your tax professional on how to position yourself for 2021.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from Turbo Tax7
Footnotes and Sources
2. The Wall Street Journal, December 11, 2020
3. The Wall Street Journal, December 11, 2020
4. USAToday.com, December 8, 2020
5. CNBC.com, December 10, 2020
6. CNBC.com, December 9, 2020
7. Turbotax.intuit.com, December 11, 2020
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Weekly Market Insights: Cases Rise, Stocks Retreat
December 15, 2020