Stocks fell on Monday as traders booked some profits given the historically strong gains logged in November.
The Dow Jones Industrial Average dropped 271.73 points, or 0.9%, to close at 29,638.64. Earlier in the day, the Dow was down by more than 400 points. The S&P 500 slid 0.5% to 3,621.63, and the Nasdaq Composite closed lower by 0.1% at 12,198.74.
Travelers and Chevron were among the worst-performing Dow stocks, falling 3.6% and 4.5%, respectively. Energy led the way lower in the S&P 500, losing 5.4% for its worst day since June 24.
The blue-chip Dow rose 11.8% in November, its best monthly performance since January 1987, as promising vaccine developments boosted confidence of a smooth economic reopening. The S&P 500 and the Nasdaq climbed 10.8% and 11.8%, respectively, in November, their biggest monthly advances since April.
“The length and strength of the current rally suggests to us that the market could be vulnerable to some pullback at these levels,” wrote John Stoltzfus, chief investment strategist at Oppenheimer Asset Management. “That said, the bull market that has emerged from the lows on March 23rd of this year has shown similarities to its predecessor ... in having a predilection to climb walls of worry aided and abetted by monetary policy and secular trends deeply embedded in technology and globalization.”
Small caps were on a tear this month as investors piled into beaten-down value names. The Russell 2000 rallied more than 18% in November, its best month ever.
Cyclical sectors, those most economically sensitive groups, led the market’s November rally amid a slew of positive vaccine news. Energy, 2020′s biggest loser, jumped 26.6% this month, while financials, industrials and materials all gained at least 12.2% during this period.
November’s gains came even as the number of coronavirus cases continued to rise in the U.S.
More than 266,000 people have died from the coronavirus in the U.S., and more than 13 million cases have been confirmed in the country, according to data from Johns Hopkins University. Dr. Anthony Fauci, the nation’s top infectious disease expert, said on Sunday that the U.S. is heading into a tough period of the pandemic in which restrictions and travel advisories will be necessary.
Los Angeles County in California imposed a new stay-home order Friday as cases surged in the nation’s most populous county. Meanwhile, New York City public schools will begin to reopen on Dec. 7.
Market sentiment took a hit after Reuters reported that the Trump administration is weighing blacklisting Chinese leading chipmaker SMIC as well as national offshore oil and gas producer CNOOC. The move would limit their access to American investors and escalate tensions with China before President-elect Joe Biden takes over.
Tesla to join S&P 500 in single tranche
Tesla Inc will join the S&P 500 index in a single part, S&P Dow Jones Indices announced on Monday following a consultation with investors about the best way to add one of Wall Street’s most valuable companies.
Adding companies with extremely high stock market values to the S&P 500 is exceedingly rare, and S&P Dow Jones Indices has said that the inclusion of the electric-car maker will generate a massive amount of trading by index funds.
Tesla, which has a market value of over $555 billion, will join Wall Street’s benchmark index prior to the opening of trading on Dec. 21.
The company’s shares rose 5% in extended trade on Monday. They have surged about 40% since Nov. 16, when it was announced Tesla would join the index.
Reference: CNBC
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