By Mark DeCambre and Sunny Oh
Stock benchmarks ended lower Monday in the last trading session of November, but equities still managed to log a monthly return for the record books, as progress toward COVID-19 vaccines helped investors look past a scary resurgence of the disease.
Analysts said stocks took a breather from their strong gains in November.
“Equity investors remained optimistic about the prospect of a vaccine but the upside momentum has clearly slowed as sentiment has become skewed to the upside and traders will likely start to take their cues from the economic data this week as prospects of any additional fiscal stimulus are delayed until next year,” said Boris Schlossberg, managing director at BK Asset Management, in a note.
Some strategists attributed the day’s pullback to profit-taking and positioning heading into the past month of 2020.
“It’s not a complete surprise” there was some rebalancing at the end of the month, said Arnim Holzer, a macro strategist at EAB Investment Group.
Keith Lerner, chief market strategist at SunTrust Advisory Services, a unit of Truist Financial, attributed Monday’s selling to profit-taking after the month’s big run-up and said that stocks may be facing some technical resistance as we head into December.
“Also, seeing a little rotation back into technology and health care. That reinforces that today’s action is mainly about profit-taking from recent winners that have gone a long way in a short period of time.” he added.
Indeed, the energy sector soared nearly 30% in November, notching its second-best performance, up nearly 27%, since April, according to Dow Jones Market Data. Financials, meanwhile, rose 16.8% for the second-best performance, behind energy, among the S&P 500’s 11 sectors.
Equities were boosted in November as a trifecta of vaccine candidates saw high efficacy rates in late-stage trials, setting the stage for potential regulatory approval within weeks.
Moderna Inc. /zigman2/quotes/205619834/composite MRNA -3.58% on Monday released final data from its late-stage trial on Monday and said it would apply for emergency-use approval from the Food and Drug Administration. Moderna shares jumped 17%. Pfizer Inc . /zigman2/quotes/202877789/composite PFE -0.47% and BioNTech SE /zigman2/quotes/214419716/composite BNTX +1.96% earlier this month filed for approval for their vaccine candidate.
News reports said Pfizer and BioNTech’s vaccine could receive official approval in the U.K. within the next few days.
“So far, the S&P 500 has not been able to surpass its intraday high of 3645.99 from [Nov. 9] which was reached on the back of the positive Pfizer/BioNTech vaccine news; this past Friday the S&P 500 reached 3644—close but then it succumbed to selling pressure,” Lerner said.
Market bears contend stocks may have pulled forward gains with the November rally, leaving equities vulnerable to weakness in the weeks ahead. The potential for a rise in COVID-19 infections to accelerate further in the wake of last week’s Thanksgiving Day holiday could also hang over the market, analysts said.
Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, on Sunday said that the U.S. may see a “surge upon a surge” of the coronavirus in the weeks after Thanksgiving, and that he doesn’t expect current recommendations around social distancing to be relaxed before Christmas.