Stocks slip, but S&P 500 still logs best month since April

Stocks pulled back slightly from their record levels Monday as Wall Street put a quiet coda on one of its most rocking months in decades.

The S&P 500 fell 0.5%, but the benchmark index still clocked a surge of 10.8% for November, its biggest monthly gain since April, as investors latch onto hopes that the economy will get closer to normal next year as coronavirus vaccines begin to be distributed.

The Dow Jones industrial average, which has far less impact on 401(k) accounts than the S&P 500, had its best month since 1987.

The S&P 500 closed at 3,21, down 16 points on the day. The Dow dropped 271 points, or 0.9%, to 29,638. The Nasdaq fell 7 points, to 12,198.

“Today’s pullback in equities is a sidestep in a market that seems poised to trend higher,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “We still think the market trends higher into the new year.”

Several big forces are behind this month’s surge, beginning with the clearing of some of the uncertainty that had dogged markets leading into the U.S. elections. Now, Democrat Joe Biden is firmly in place as the president-elect in Wall Street’s eyes, and investors have avoided their worst-case scenario of weeks or months of limbo with an unknown winner.

Investors also found encouragement in prospects that Washington will remain under divided political control. Republicans are on track to hold onto control of the Senate if they can win one of two upcoming runoff elections in Georgia. A split government would mean low tax rates and other pro-business policies could remain the status quo.

But the turbocharger for the market’s move higher has been a huge dose of hope as pharmaceutical companies come closer to delivering vaccines to a world beaten down by the COVID-19 pandemic. Several have reported encouraging data recently suggesting their vaccine candidates are highly effective.

“Vaccines offer the promise that the major disruptions of the pandemic will fade from the scene in 2021,” said Stephen Innes, chief global market strategist at Axi. “Economic life will gradually heal; the world will start to move on from all the human suffering that the virus has wrought.”