The third wave of the pandemic may be showing signs of a peak. While new cases remain very high, the seven-day daily average was down for two days in the past week, suggesting we may be close to a peak. Given the lag from Thanksgiving, that conclusion seems reasonable as much of the travel surge should be starting to play out, while control measures are becoming more widespread.

With the start of COVID vaccinations and signs that the third wave may be peaking, I have been thinking a lot about what the new normal will look like—and what it will mean for us as investors. We are not there yet, of course. But we can see the end of the pandemic in the not-too-distant future. Markets are already there, but markets tend to have a ready-fire-aim approach. So, there is still an opportunity to be thoughtful. Let’s walk through what the new normal might look like.

We’re nearing the end of a hard year, with the pandemic raging once again and the economy starting to slow. On the other hand, vaccines will soon be coming into play, companies are adapting, and there is the possibility of a spending boom next year. Despite risks ahead (e.g., the chance of another surge of infections with holiday travel), could 2021 be better for medical news, for the economy, and for the markets?

A lot has been written about how bad things are. Although vaccines are now being deployed, daily new cases continue to hit new highs. Even as testing expands, the positive rates remain way too high, signaling that the virus continues to spread. States that had the virus under control are now seeing new outbreaks.

Yesterday I appeared on Yahoo Finance’s Live to discuss the current market and outlook for 2021. Listen in to hear more.

Last week was relatively quiet in terms of economic updates, with a focus on the November inflation reports, the weekly initial jobless claims report, and the first look at consumer sentiment in December. The consumer sentiment report was the highlight during the week, as consumer confidence unexpectedly rose to start off December. This week, we’ll see more updates. The November retail sales and industrial production reports are set to be released, as are updates on home builder confidence and new home construction.

Today, I'd like to provide an update on the coronavirus, including the economic and market implications. We had mixed news on the medical front. The third wave of the pandemic continues, although there were positive developments on vaccines. People could start getting shots in days, and recent projections suggest we could approach herd immunity as soon as June. Turning to the economy, the news got worse. Job growth dropped substantially, and layoffs rose sharply. With the employment market down, consumer confidence softened further, along with retail spending. Clearly, the third wave is acting as a significant drag on the economy, but what should we expect from the markets? Watch my latest video to learn more.

The third wave of the pandemic has not yet peaked. While we saw a significant downturn in case growth late last month, that was due to limited reporting during the Thanksgiving holiday. Since then, after an expected surge as reporting caught up, cases have continued to rise. We are now two weeks past the start of the holiday travel period, and a rise in cases is now showing up (likely due to that travel).

My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Market Risk Update. Thanks for the assist, Sam!!

Markets rebounded in November, as positive news on the vaccine caused markets to surge. The S&P 500 gained 10.95 percent during the month, while the Nasdaq Composite rose by 11.91 percent and the Dow Jones Industrial Average by 12.14 percent. These strong results helped break a streak of two consecutive months with declining equity markets, and all three indices set new all-time highs. Despite the strong returns in November, however, markets still face very real risks, as we discuss below.

My colleague Sam Millette, senior investment research analyst on Commonwealth’s Investment Management and Research team, has helped me put together this month’s Economic Risk Factor Update. Thanks for the assist, Sam!

The economy continued to show signs of growth in November, but the data weakened as the third wave of the pandemic slowed economic activity. Job growth slowed substantially, and service sector and consumer confidence both declined. Despite the slowdown, however, growth has continued as the economy continues to adapt. While the pandemic is indeed acting as a growing headwind, the recovery continues to be surprisingly resilient.