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Why American Express Stock Rose 30% in November

By Demitri Kalogeropoulos - Dec 7, 2020 at 10:08AM

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Investors gained confidence in an economic rebound on the way.

What happened

American Express ( AXP -0.53% ) shareholders trounced a surging market in November as their stock gained 30% compared to the 11% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally pushed the financial services giant to nearly positive territory for the year, but the stock remains a bit behind the market through late 2020.

A woman uses her credit card to make a purchase through a smartphone.

Image source: Getty Images.

So what

November's stock market rally was driven by positive vaccine news that implied an approaching end to the COVID-19 pandemic. As a result, American Express joined its financial sector peers in posting surging gains that erased some of their year-to-date losses.

The prospect for an improving economy in 2021 is encouraging because that rebound would mean sharply stronger operating results that reflect more spending activity by consumers. American Express in late October revealed that revenue is down 29% through the first three quarters of the year, and earnings have declined 86%.

Now what

Major variables remain that will impact the financial services industry, including the vaccine deployment timeline and the arrival of any additional federal stimulus. As a result, investors should brace for more volatility in American Express stock over the next several quarters while those questions are resolved.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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