Weekly Market Commentary: Small-caps come alive in record-setting week

Each of the major indices set intraday and closing record highs this week, and none rose more than the small-cap Russell 2000 with its 6.1% gain. The Nasdaq Composite rose 3.1%, the S&P 500 rose 2.0%, and the Dow Jones Industrial Average rose 1.4%.

The animal spirts were in full force, supported not only by a sentimental fear of missing out on further gains but also fundamental factors:

Fed Chair Powell made it clear the central bank is in no hurry to raise rates after the FOMC announced plans to taper asset purchases by $15 billion starting this month.
The October employment report was stronger than expected, featuring 531,000 additions to nonfarm payrolls (Briefing.com consensus 400,000) and a 4.6% unemployment rate (Briefing.com consensus 4.7%).
Interest rates dropped noticeably amid tempered rate-hike/inflation expectations. Fed Chair Powell said inflation should be less of an issue by the second or third quarter of 2022.
Pfizer (PFE) said its COVID-19 oral antiviral reduced the risk of hospitalization or death by 89% in interim data.
Pleasing earnings news from a host of companies, including Qualcomm (QCOM) , which catalyzed a 12% gain in NVIDIA (NVDA) in one day.

Nine of the 11 S&P 500 sectors ended the week with gains. The consumer discretionary (+5.0%) rose 5% to a first-place finish, followed by 3% gains in information technology (+3.3%) and materials (+3.2%). The health care (-0.7%) and financials (-0.6%) sectors were the two sectors that closed lower.

Notably, Avis Budget (CAR) was up as much as 218% in 90 minutes in an epic short squeeze after the company beat earnings estimates. The stock eventually cut those gains in half, but the crazy move exemplified the intense spirit of this bull market.

Recapping the moves in the Treasury market, the 2-yr yield dropped ten basis points to 0.39%, and the 10-yr yield dropped 11 basis points to 1.45%.

WTI crude futures briefly retreated below $80.00 per barrel after OPEC+ agreed to maintain its current production schedule for December. Oil prices bounced back on Friday but still ended the week lower by 2.7% to $81.25/bbl.

A weekly recap of market activity and events, featuring commentary, analysis written with individual investors in mind.