This Weekly Market Update reviews the top three market headlines; Pfizer Announces Favorable COVID-19 Vaccine Test Results, Value and Small Cap Stocks Surge on Reopening Hopes, Federal Reserve Maintains Monetary Stimulus Measures

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Top Three Market Headlines

Pfizer Announces Favorable COVID-19 Vaccine Test Results: Pfizer and its partner BioNTech announced last Monday that their COVID-19 vaccine proved to be 90% effective in the latest round of clinical trials. The result was much better than many anticipated and highlighted the remarkable progress made by U.S. pharmaceutical companies, with support from the U.S. government, to stop the global spread of the pandemic. Both Pfizer and BioNTech expect to ask the FDA for emergency authorization in the coming weeks, which dramatically increases the likelihood of a vaccine distribution plan by year end.

Value and Small Cap Stocks Surge on Reopening Hopes: Pfizer’s announcement sparked a frenzied week of trading in the stock market. The S&P 500 index returned 2.2% for the week, but this result belied forceful moves beneath the surface. Chiefly, investors rotated from a “pandemic trade” favoring companies that have thrived during Covid-19, including technology and internet retailers, to a “reopening trade” focused on firms seen benefiting most from a return to pre-pandemic levels of consumer and business behavior, such as cyclicals and small caps. As a result, the tech-heavy Nasdaq index fell 0.5% on the week, while the Russell 2000 small cap index gained 6.1%. In addition, the Russell 1000 Value index (+5.7%) enjoyed its largest weekly outperformance versus the Russell 1000 Growth index (-1.3%) in at least five years.

Federal Reserve Maintains Monetary Stimulus Measures: The Federal Reserve kept monetary policy unchanged at its early November meeting, choosing to continue purchasing Treasury and mortgage-backed securities at a pace of $120 billion a month while holding the federal-funds rate near zero. The Fed noted that economic activity and employment have continued to recover “but remain well below their levels at the beginning of the year.” Fed Chair Jerome Powell stated that “a full economic recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities,” and reiterated his call for greater fiscal support to help drive greater economic activity.

As of November 16, 2020
Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World 2.26% 7.36% 8.83% 13.75%
S&P 500 2.21% 6.82% 12.77% 18.09%
Russell 2000 6.13% 15.82% 5.76% 11.32%
MSCI EAFE 3.89% 7.83% 0.18% 3.65%
MSCI Emerging Markets 1.03% 9.94% 8.66% 16.37%
FTSE NAREIT 8.58% 10.04% -9.26% -8.14%
Bloomberg Commodity 1.24% 4.07% -8.51% -6.08%
Barclays U.S. Aggregate -0.14% -0.10% 6.68% 7.29%

WSJ 11/09/2020, WSJ 11/5/2020, Federal Reserve 11/5/2020. Data from Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.