November 13, 2020
Market Recap Week Ending Nov 13
Monday – Dow +834 to 29,158 NDAQ (181) to 11,713 and the S&P +41 to 3,550.A huge announcement from Pfizer (PFE) and partner BioNTech that their Covid19 vaccine is more than 90% effective sent the Dow soaring today. According to Dr. Fauci, a vaccine with a 50%-60% effective rate would be acceptable. The reopening trade including airlines, cruise lines, and movie theaters were on fire while the stay-at-home tech stocks were slammed. Oil prices jumped on the news with WTI up 8.8%. Energy led seven out of eleven S&P sectors higher, rallying a dizzying 14.2%. The 10-year U.S. Treasury sold off as traders moved into risk and out of the safe haven security; the benchmark yield rallied to 0.92%. As yields rose, so rose the banks which are dependent on higher rates to fatten their margins; JPMorgan (JPM +13%)) and Citigroup (C +11%) were up strongly. The S&P 500, S&P 400, the Dow Industrials and the Dow Transports all notched new all-time highs.
Tuesday – Dow +263 to 29,420 NDAQ (159) to 11,553 and the S&P (5) to 3,545. The vaccine rally continued today but was much narrower than yesterday in its scope. The rotation out of tech and into cyclicals continued with eight of eleven S&P sectors positive led by energy, consumer staples and industrials. Tech was the worst amongst the laggards, down 1.94%…Apple (APPL) announced a new Mac lineup and its new M1 processor chip, but the market was unimpressed, and the stock traded down 0.30%…Ely Lilly’s (ELI) antibody drug to combat Covid19 was approved by the FDA for emergency use; the stock rallied 2.97% on the news…Ulta Beauty (ULTA +7%) announced a deal to open shops inside of Target (TGT +2%) stores around the country…Boeing (BA) jumped 5.2% as the FAA grows nearer to finalizing ungrounding the 737 Max as soon as November 18th….
Wednesday – Dow (23) to 29,397 NDAQ +232 to 11,786 and the S&P +27 to 3,572.The rotation into cyclicals stopped and traders piled back into tech. Traders took profits in the airlines, casinos, casual dining, and cruise lines and bought the stay-at-home tech names with abandon; Apple (AAPL +3%), Amazon (AMZN +3%), SalesForce (CRM +2.5%), Facebook (FB +1.5%), Microsoft (MSFT +2.6%), Netflix (NFLX +2.6%), Pinterest (PINS +7%), Twilio (TWLO +2.8%), Twitter (TWTR +2.88%), and Zoom (ZM) which had lost 25% in trading this week, rallied 9.93%…Lyft (LYFT) traded up 1% after management said the company can be EBITDA profitable by Q4 2021…Oil traded up again; WTI closed at $41.45/bbl and is up 11.6% this week. The bad news: it is still down 32% year to date…Dr. Fauci predicted that Moderna’s (MRNA) Covid19 vaccine could be as effective as Pfizer’s (PFE), sending its shares up 8.4%. Post close, the drug company stated that they had enough data to begin analyzing data from their Phase III trials and the stock traded up an additional 2% in after-hours trading.
Thursday – Dow (317) to 29,080 NDAQ (77) to 11,709 and the S&P (35) to 3,537.Increasing Covid19 cases weighed heavily on the market today; 144,000 new cases were recorded in the United States yesterday, bringing the seven-day moving average of new cases to just below 130,000…the Chicago mayor has issued a stay-at-home advisory for the city…New York has imposed curfews for restaurants, bars and gyms…Moderna (MRNA) traded up 6.5% on the news they announced last night that they have enough data to analyze data from their Phase III Covid19 trial…Weekly jobless claims fell again to 709,000 vs last week’s number of 757,000 and expectations of 731,000…Disney (DIS) traded up 3.34% on its earnings call despite its operating income being cut by $3.5 billion due to the pandemic…Cisco Systems (CSCO) traded up 7.65% due to better than expected earnings…Palantir (PLTR) traded down 8.9% despite reporting year over year sales growth of 52%.
Friday – Dow +399 to 29,479 NDAQ +119 to 11,829 and the S&P +48 to 3,585 (record high).The vaccine rally continued today along with a rotation out of large cap growth and into value and small cap…U.S. Covid19 infections surged to over 160,000 cases today, a new record and pushing the seven-day moving average to 131k, 32% higher than this time last week…Disney (DIS) traded up 2% on greater than expected paid subscribers, announcing 73 million of them…DraftKings (DKNG) traded up 3.85% on better-than-expected Q3 results…November consumer sentiment was lower than expected at 77 vs 81.8 in October and expectations of 81.5…JPMorgan says that credit card data from their Chase customers has shown a widespread decline since November 9th, especially so in the states hit the hardest by Covid19.
The week in review…Dow +1156 or +4.1% NDAQ (66) or (0.5%) and the S&P +76 or +2.1%. An alarming tsunami of new Covid19 infections in the United States, especially in the Midwest and the Prairies was completely overshadowed by the announcement of a highly effective vaccine from Pfizer and the Presidential election which was finally called for former Vice President Joe Biden. Multiple legal challenges by the President have failed and recounts are unlikely to change the outcomes in any of the states in question, especially in Pennsylvania which is the only state in this scenario that matters. In the meantime, 3 other states that went uncalled,Nevada, Arizona, and Georgia, were all resolved in Joe Biden’s favor. The transition has begun with Biden naming Ron Klain his Chief of Staff. The next step to monitor will start next week as states begin to certify their votes; Georgia Nov. 20, followed by Pennsylvania and Michigan on Nov. 23, Arizona on Nov. 30, and Wisconsin and Nevada on Dec. 1. By seating one candidate’s electors, these certifications will raise the legal bar to overturn state results and make it even more difficult for the President to prevail before the Electoral College meets Dec. 14. On the economic front, jobless claims fell again which was a positive, but consumer sentiment fell and was backed up by a JPMorgan survey of their Chase credit card users that showed a sharp decline in spending since November 9. Perhaps it is a short-term decline as Goldman Sachs (GS) hiked their year-end S&P target 4% to 3,700 on Wednesday and expects the benchmark to hit the 4,300 level by the end of 2021, a 21% rally from today’s levels. Goldman continued the bullish theme today stating that 2021 will be a strong year with 5.3% GDP growth but that the ride will be bumpy. Today, JPMorgan’s top strategist, Marko Kolanovic said that the Pfizer vaccine allows investors to look past the rising Covid19 infections and will lead to a 13% rally in the S&P by early 2021.
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