Wall Street consolidated its gains on Wednesday, with stocks trading flat to slightly weaker a day after major benchmarks scaled to new highs.
Ahead of the U.S. Thanksgiving holiday, optimism over the imminent deployment of a COVID-19 vaccine propelled the Dow Jones Industrial Average above 30,000 for the first time ever on Tuesday, extending a breathtaking rally that’s carried stocks deep into a bull market.
However, caution set in early Wednesday, as investors digested weekly jobless claims that revealed a labor market that’s still struggling under the weight of the pandemic. Another 778,000 workers filed for benefits, underscoring how an implacable wave of COVID-19 infections are putting a damper on business and consumer activity.
Yet stock investors are unfazed. On Wednesday, the Russell 2000 (RUT) index also set a new peak, and the Dow (^DJI) is up over 13% in November — more than 10,000 points higher than the multi-year low it breached in March, when panic over the virus’ spread cratered global markets. The S&P 500 (^GSPC) is perched just below a new record high, with analysts expecting the index to breach 3800 sooner rather than later.
“The recovery is intact and the world likely re-opens in the [second half of 2021], but a lot of optimism is priced in already on vaccine/recovery,” Bank of America said late Tuesday. “Vaccine execution risk, delayed fiscal stimulus and longer lockdowns are risks.”
The technology-heavy Nasdaq, which have been beaten down as investors rotate out of “stay at home” stalwarts benefiting from coronavirus-related lockdowns, also posted strong gains. In early dealings, Tesla (TSLA) hit a new record high, and now has a market capitalization north of $500 billion — even before it joins the S&P 500.
Investors also cheered news that President-elect Joe Biden was poised to nominate former Federal Reserve Chair Janet Yellen — who is held in high esteem by Wall Street — as Treasury Secretary. The Trump administration has formally begun the transition process, in spite of President Donald Trump’s refusal to issue a concession.
Although a relentless wave of new COVID-19 infections has crashed down on the global economy — driving up hospitalizations and deaths in its wake — major drugmakers have indicated that an inoculation is right around the corner.
On Monday, University of Oxford and AstraZeneca (AZN) revealed that their candidate demonstrated efficacy of 70.4% in two large-scale trails, If a lower dose is used, then a second, full dose, the efficacy is up to 90%, the company said. Separately, Pfizer (PFE) and BioNTech (BNTX) announcing plans to file for an emergency use authorization with the U.S. Food and Drug Administration, which would allow them to have their vaccine used in the U.S. starting in December.
A fully inoculated public is seen as a boost to ravaged service industries like travel, leisure and entertainment.
“We retain high conviction in our arguments for above-consensus GDP growth in 2021 and 2022,” Goldman Sachs analysts wrote last week.
“However, the rapid and broad-based resurgence of the coronavirus has led us to downgrade our Q4 and Q1 GDP forecasts. We now expect +3.5% and +1.0% annualized growth in Q4 and Q1,” the bank said — a sharp downward revision from previous estimates of +4.5% and +3.5%, respectively.
However, “the larger drag in the winter should imply an even larger re-acceleration on the back of mass immunization” that will boost growth from Q2 of next year onward, Goldman said.
11:45 a.m. ET: Slack spikes on report that Salesforce is looking to buy the company
The Wall Street Journal is reporting that software giant Salesforce (CRM) is in a buying mood, and has its sight set on workplace messaging service Slack (WORK). The latter’s stock was halted after a runup of over 24%.
10:30 a.m. ET: New home sales dip, but remain at high levels
New-home sales in the U.S. held up in October, remaining near the best pace since 2006 and well above pre-pandemic levels, the latest sign that record-low mortgage rates are underpinning robust buyer interest.Purchases of new single-family houses dropped 0.3% from September to a 999,000 annualized pace from an upwardly revised 1.002 million rate, government data showed Wednesday.
10:00 a.m. ET: Personal spending rises, beats expectations
File this one under ‘economic mixed signals:’ Personal spending rose by 0.5% last month, slightly ahead of consensus expectations of 0.4. Meanwhile, personal income tumbled by 0.7%, compared to Wall Street estimates of a 0.1% drop.
The data — which essentially show that consumers are spending more than they’re earning — is reflective of a weak labor market, and appears to defy sentiment numbers that show consumers are growing gloomier.
9:30 a.m. ET: Stocks slip after Dow hits record
Here are main moves in markets as of 9:30 a.m. ET:
S&P 500 (^GSPC): 3,630.21, -5.20 (-0.14%)
Dow (^DJI): 29,954.86, -91.38 (-0.30%)
Nasdaq (^IXIC): 12,061.71 +24.92 (+0.21%)
Crude (CL=F): $45.52, +$0.61 (+1.36%)
Gold (GC=F): -$1,810.00, +$5.40 (+0.30%)
10-year Treasury (^TNX): flat, to yield 0.8770%
8:30 a.m. ET: Jobless claims worse than expected
The beleaguered U.S. labor market is absorbing a fresh wave of jobless workers, with 778,000 new unemployment claims filed in the latest week, as soaring COVID-19 hospitalizations and deaths lead to renewed restrictions on business activity. That figure was worse than Wall Street’s consensus estimates, and shows how the virus’ surge is starting to affect an already battered market for displaced workers.
7:30 a.m. ET Wednesday: Stock futures mixed ahead of jobless data
Here were the main moves in equity markets, as of 7:30 a.m. ET:
S&P 500 futures (ES=F): 3,634.50, +1.75 (+0.05%)
Dow futures (YM=F): 29,969.00, -29.00 (-0.10%)
Nasdaq futures (NQ=F): 12,117.75 +41.75 (+0.35%)
6:40 p.m. ET Tuesday: Stock futures add to gains
Here were the main moves in equity markets, as of 6:40 p.m. ET Tuesday:
S&P 500 futures (ES=F): 3639.00, +6.25
Dow futures (YM=F): 30047, +49
Nasdaq futures (NQ=F): 12116.50, +40.50