Stock Market Update: Monday, Nov. 30, 2020
Wall Street closed lower while wrapping up a strong month for the major indexes despite the losses — and more in Monday’s stock market update.
Mixed economic reports and profit taking outweighed more good news concerning coronavirus vaccines as Moderna Inc. (Nasdaq: MRNA) announced it will apply for emergency use in the U.S. and Europe.
Stock Market Update
The Russell 2000 declined 1.9% with the session low tapping 1,813.
The Dow was down 0.9% following the intraday pullback to 29,463.
The S&P 500 fell 0.5% after trading to a morning low of 3,594.
The Nasdaq slipped 0.1% despite tagging its third straight record high of 12,244 shortly after the open.
For the month, the Russell 2000 zoomed 18% while the Dow jumped 11.9% — its biggest monthly gain since 1987. The Nasdaq surged 11.8% while the S&P 500 rallied 10.8%.
Technology and Healthcare were the only sectors that showed strength after rising 0.7% and 0.2%. Energy and Utilities were the worst performing sectors after sinking 5.5% and 1.4%, respectively.
Stock Market Movers
Shares of Nikola Corp. (Nasdaq: NKLA) plummeted 27% after the company announced a new, smaller partnership with General Motors Co. (NYSE: GM) that supersedes a prior agreement. The previous 11% ownership piece of the original deal was a blow to Nikola as billions of research and development is now likely off the table.
One Wall Street analyst said the agreement went from a game-changer deal for Nikola to a good supply partnership, but nothing to write home about. The analysts also kept an “Underperform” rating and $15 price target on Nikola shares following the news of the revised deal.
Stock Market Outlook
Food delivery startup DoorDash Inc. said it is looking to raise up to $2.8 billion in its initial public offering (IPO), as it gears up for one of the most anticipated stock market debuts in recent years.
DoorDash said it plans to sell 33 million shares priced between $75 and $85 apiece. DoorDash will list on the New York Stock Exchange and trade under the ticker DASH. Goldman Sachs Group Inc. (NYSE: GS) and JPMorgan Chase & Co. (NYSE: JPM) are leading the underwriting group for the deal.
Meanwhile, home rental startup Airbnb is also expected to debut in December — typically a slow period for IPOs — and mark a strong finish to a blockbuster year for new listings.
Companies have raised over $140 billion thus far in 2020, making it the biggest year for stock market listings in the past few decades, according to Dealogic, which has tracked IPO data since 1995.
Global Economy
European markets were weak as Brexit negotiations remained in focus. Conversations between U.K. Prime Minister Boris Johnson and the EU Commission president were held over the weekend, and were viewed as a movement toward either a trade deal or talks crumbling ahead of the deadline.
The UK’s FTSE 100 tanked 1.6% while the Belgium20 and France’s CAC 40 dropped 1.4%. The Stoxx 600 lost 1% and Germany’s DAX 30 was down 0.4%.
Asian markets settled lower despite upbeat factory activity data out of China.
Hong Kong’s Hang Seng sank 2.1% and South Korea’s Kospi stumbled 1.6%. Australia’s S&P/ASX 200 dropped 1.3% and Japan’s Nikkei lost 0.8%. China’s Shanghai was off 0.5%.
China’s Purchasing Manager’s Index rose to 52.1 in November, the highest PMI reading since September 2017, and up from 51.4 in October. Forecasts were for a reading of 51.5.
U.S. Economy
Pending Home Sales Index slipped -1.1% to 128.9 in October after falling -2% to 130.3 in September. Sales declined in the Northeast (-5.9%) and the Midwest (-0.7%), while they edged up in the South (0.1%) and were flat in the West.
Chicago PMI fell 2.9 points to 58.2 in November, following the -1.3 point slide to 61.1 in October. The three-month moving average improved to 60.6 from 58.2 in October.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was down for the third time in four sessions following the intraday pullback to $159.76. Near-term and upper support at $160-$159.50 was breached but held. A close below the latter would signal additional weakness toward $158.50-158.
Resistance is at $160.25-$160.75 and the 50-day moving average.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) snapped a four-session slide after tagging a morning high of 22.89. Prior and lower resistance at 22.50-23 was tripped but held. A close above the latter would signal a retest towards 24-24.50
Current support is at 20-19.50.
Stock Market Analysis
The SPDR Small-Cap 600 ETF (NYSE: SLY) extended its losing streak to three sessions after closing on its session low of $73.70. Upper support at $74-$73.50 was breached and failed to hold. A close below the latter would be an ongoing bearish signal for additional weakness towards $72.50-$72.
Lowered resistance is at $75-$75.50 followed by $76-$76.50.
RSI (relative strength indicator) is in a downtrend with upper support at 65-60 failing to hold. A move below the latter would indicate additional weakness towards 55-50 and prior levels from the beginning of the month. Resistance is at 70.
Sector
The SPDR S&P Homebuilders ETF (NYSEArca: XHB) extended its losing streak to four sessions following the intraday pullback to $56.40. Near-term and upper support at $56.50-$56 was breached but held. A close below the latter would signal additional downside risk towards $55.50-$55 and the 50-day moving average.
Resistance is at $58-$58.50.
RSI remains in a downtrend with upper support at 55-50 holding. A drop below the latter would suggest additional weakness towards 45-40. Key resistance is at 60 and the monthly peak.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.