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Market Watch: Dec. 18

Dec 18, 2020 | 1:20 PM

Big Picture

U.S. Markets Hit Record Highs on Stimulus Hopes

Technology stocks climbed Monday, extending a 2020 rally that’s fueled much of the market’s gains since March. The Nasdaq was up 62 points, while the Dow lost 185 and the S&P dropped 16. As of Monday, the Nasdaq was up nearly 40 per cent for the year, while the S&P and Dow had added 13 per cent and 4.6 per cent, respectively.

While markets climbed early on growing hopes for a new U.S. stimulus deal, optimism faded later in the session as investors weighed the potential for further lockdowns in the U.S. In Canada, the TSX lost 161 points, weighed down by the energy, financials and materials sectors.

Growing hopes for an economic relief package sent markets higher Tuesday, as U.S. lawmakers continued to make progress during negotiations Monday evening. By Tuesday’s close, the Dow was up 338 points, the S&P added 47, while the Nasdaq jumped 155 to hit yet another record high. The TSX was also up more than 100 points, led by the materials sector, which saw gold prices gain over the likelihood of additional stimulus.

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Markets were slightly mixed Wednesday, with the Dow down 44 points, while the S&P and Nasdaq added 6 and 63 points, respectively. In Canada, the TSX ticked higher 61 points. Although stimulus hopes remain high, that was offset somewhat by U.S. retail sales data, which showed a 1.1 per cent drop in November from the prior month, with restaurants, department stores and car dealerships hit especially hard.

Stimulus hopes were once again front and centre for investors Thursday, as U.S. lawmakers closed in on a roughly $900 billion relief deal that includes another round of cheques to struggling U.S. households. In the U.S., the labour market recovery took a step back as new jobless claims rose to 885,000. By Thursday’s close, all three major U.S. benchmarks hit closing records, while the TSX added 85.

N.A. Markets Notch Solid Gains for the Week

For the four trading days covered in this report, the Dow climbed 257 points to close at 30,303, the S&P 500 added 59 points to settle at 3,722, while the tech-heavy Nasdaq surged 216 points to close at 12,765. In Canada, the TSX rose 104 points to end at 17,653.

Strategy

Canadian retail sales rose for the sixth consecutive month in October, ahead of estimates, led by new car sales.

Sales edged higher by 0.4 per cent in the month, after September’s upwardly revised reading of 1.9 per cent. Sales increased in six of the eleven subsectors. Core retail sales, which exclude gasoline stations and autos, rose by 0.3 per cent on improved sales at sporting goods and hobby stores (11.8%), furniture stores (6.6%), and garden equipment (2.9%).

Retail e-commerce sales grew slightly slower in the month but remained up 67.7 per cent on a year-over-year basis. Online sales now account for 5.2 per cent of total retail trade, up 1.8 per cent from a year ago. Regionally, receipts in British Columbia rose the most, increasing 2.1 per cent from the previous month. In Ontario, sales declined (-0.4%) for the first time since April, coinciding with stricter public health measures as sales in the Toronto area fell by 1.2 per cent. Advanced November estimates suggest sales were relatively unchanged in November.

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