Wednesday initially looked to be an exciting day in the stock market…but in the end it wasn’t. US stocks finished mixed and both the S&P 500 and the Dow again fell short of notching new record highs.
Tech stocks rallied back after their recent selloff, while financials and industrials stocks lagged.
Up, down, up, down….
The Dow is now in the red again, down 0.4%, or 127 points.
This seesaw is essentially telling us about the tug-of-war between the rally in tech stocks, including Microsoft (MSFT) and Apple (AAPL), and the selloff in financials and industrials stocks, such as American Express (AXP) and Boeing (BA).
With two hours to go until the bell rings, it looks like the Dow and the S&P 500 will again fall just short of notching a new record closing high.
While stocks are up, the Dow remains some 80 points below its February peak. For the S&P, the gap is much tighter, but it’s not there yet.
The Dow up 0.2%, or 50 points. The S&P is up 0.9%, and the Nasdaq Composite is up 2%.
We’ll be staying glued to our screens.
There’s been a relief rally on Wall Street since last week’s presidential election.
“Markets don’t like political uncertainty, so certainly there’s some relief there,” said Laura Kane, head of Americas thematic investing at UBS Global Wealth Management.
Pfizer’s (PFE) vaccine news gave the market another push higher this week. So it’s probably time for investors to reconsider their portfolios and get ready for what’s next.
For Kane, that would be a pivot into consumer discretionary stocks, as well as industrials and financials. “All these sectors do well when the economy is doing well,” Kane told Alison Kosik on the CNN Business digital live show Markets Now.
The eventual release of a vaccine could propel the market upwards. “We think stocks can go higher from here,” Kane said.
She also expects a “sizable” stimulus package, which likewise would boost the market.
The pandemic has been going on for months. So it’s no surprise that consumers want to once again celebrate special and family occasions and regain a sense of normalcy.
Party City (PRTY) reported a solid quarter this week, with earnings of 0.10 per share, beating consensus estimates for a $0.46 per share loss. (A year ago it lost $0.28 per share.) “We found that people still want to celebrate safely,” said the company’s CEO Brad Weston.
And while the company’s third quarter stock price has recovered to slightly above where it was before the pandemic shut down the economy in March, Party City sales have not. Its October sales were down 16%, and Halloween sales were down as well.
President-elect Joe Biden is facing a huge task: fixing America’s broken labor market. Even as the economy has started its long road to recovery, job postings for sectors like retail and entertainment are still down.
“The reality is that Covid-19 is in the driver seat of this economy,” Andrew Chamberlain, chief economist at recruitment site Glassdoor, told Alison Kosik on the CNN Business digital live show Markets Now.
Sectors such as leisure, hospitality, retail, as well as energy and defense are still being affected by the pandemic. This will continue until the virus is under control, whether Washington agrees more stimulus or not, Chamberlain said.
Women are being hit especially hard by the pandemic crisis, as they disproportionately are taking on child care responsibilities.
“Doing something about universal pre-school would be a way to do something about that,” Chamberblain said. It would also improve inequality, he added.
Shortly before midday, all three major stock indexes are in the green as the Dow has climbed higher again.
The S&P 500 is up 0.7%, while the Dow is up 0.3%, or 75 points. The Nasdaq Composite has the biggest gains today at 1.5%, clawing back some lost ground from the past days.
The Dow is only about 50 points away from its February all-time high. It could make that leap, but after the lackluster morning trading the odds might be lower.
The S&P is also edging closer to its September record, but so far it’s still below it.
Aurora Cannabis (ACB) proposed a $125 million equity offering on Wednesday in an effort to raise more cash, but the price is lower than what investors hoped it would be.
Cannabis stocks soared after former Vice President Joe Biden was projected as the next President of the United States on Saturday and several states voted to legalize marijuana.
Industry executives are happy about the election outcomes at both the federal and state levels, and Aurora Cannabis was part of that stock boom. But Aurora’s stock tanked 20% Tuesday from the prior day’s close after the company posted lower-than-expected earnings.
Cannabis companies across the US are hoping to launch more products that do not contain THC, the psychoactive component of cannabis, which could be serve as a boost to the industry as a whole.
The Aurora Cannabis stock is down 73.84% year-over-year.
While investors await the the projected outcome of the presidential election and what that might mean for more government stimulus next year, workers who lost their jobs in the pandemic continue to struggle.
The Labor Department’s weekly jobless claims report, due tomorrow morning at 8:30 am ET, is expected to show another 735,000 first-time applications for benefits in the week ended November 7. That would be some 16,000 fewer claims than in the previous week, but doesn’t include the self-employed and gig workers who filed for Pandemic Unemployment Assistance, a program set up in the spring to help those who aren’t usually eligible for government aid.
Continued jobless claims, which count people who have filed for benefits for at least two straight weeks, are expected to hit 6.9 million, down from 7.3 million.
While the continued claims number has been falling, economists worry that it’s going down for the wrong reasons. States provide unemployment benefits only for a certain period of time. After that, workers are rolled into other government programs, such as the Pandemic Emergency Unemployment Compensation (PEUC) program, specifically designed for the coronavirus crisis.
Just half an hour into the trading day, the Dow has given up its gains and fallen into negative territory.
So much for a record today? Perhaps. The index is still very close to its February all-time high, and the session is far from over.
For now, the downturn is lead by losses in financial and industrial stocks. Tech stocks continue to rebound.
US stocks opened in the green on Wednesday as the technology sector is rebounding from its recent declines.
Stock futures are pointing to a higher open as tech stocks are bouncing back from their recent losses. This momentum could propel both the S&P 500 and the Dow to new highs today.
The Dow finished about 130 points below its February all-time high yesterday. The S&P closed about 1% below its September record.
Many of the millions forced out of work this year because of the coronavirus crisis have been able to return to the labor force, but not everyone has been so lucky. Women, and specifically mothers, are still faring worse during the pandemic than men.
New research from the Federal Reserve Bank of Dallas shows that in August and September, workforce participation rates fell for women while they increased slightly for men. This timing suggests that the driver of this trend is remote learning and increased child care responsibilities, which women tend to take on.
In October, workforce participation rates increased for both women and men, but female workers are still lagging behind, and this could weigh on economic growth going forward.
As of October, the overall Black unemployment rate remained the highest of the demographic groups the Bureau of Labor Statistics breaks out.
Goldman Sachs is predicting the stock market recovery from the pandemic is just getting started.
The Wall Street bank boosted its year-end 2020 target for the S&P 500 to 3,700, implying a 4% gain from current levels. Goldman Sachs expects the benchmark index will rally to 4,300 by the end of next year and hit 4,600 by the end of 2022.
The optimistic outlook is based in large part on Pfizer’s (PFE) coronavirus vaccine, which the drug maker says is more than 90% effective.
“A vaccine is a more important development for the economy and markets than the prospective policies of a Biden presidency,” Goldman Sachs strategists wrote in a note to clients. The report said Pfizer’s vaccine success is a “positive event that will allow society to gradually normalize during 2021.”
Like others on Wall Street, Goldman Sachs is looking past President Donald Trump’s efforts to overturn the election results.
“Elections have consequences, both for policies and markets,” the report said. “Joe Biden has been elected the 46th president of the United States.”
But the key, according to Goldman Sachs, is that Congress will “likely remain divided,” meaning there’s “little scope” for tax hikes and other legislative changes.
In spite of all the vaccine and election euphoria on Wall Street, dark clouds remain on the horizon. Covid-19 infections are rising are some states’ medical systems are overwhelmed.
This development will have a negative effect on people’s behavior, including shopping, travel and eating out at restaurants, warned Apollo Global Management chief economist Torsten Slok in a note this morning.
The near-term outlook for the global economy isn’t great because of the resurgence of the virus. Even with a vaccine on the horizon, which could boost growth next year, it will take some time until people are vaccinated.
“Even without another lockdown, more cautious consumer and corporate behavior could have a negative impact on the economy, in particular if the lack of a lockdown means that the virus will be a problem for a longer period,” he said.
When Joe Biden is sworn in as America’s 46th president, he will immediately inherit twin health and economic crises. This precarious backdrop raises the stakes for a smooth transition from one president to the next.
There is a precedent for political rivals teaming up during a crisis.
In December 2008, Republican President George W. Bush approved a $17.4 billion rescue of GM and Chrysler because he didn’t want the auto industry to collapse before Barack Obama was sworn in.
Flash forward to today. Economists broadly agree that despite the significant progress on a coronavirus vaccine, the US economy badly needs more fiscal relief. Federal Reserve Chairman Powell, who was named by Trump, is among those calling for Congress to provide more fiscal stimulus.
Stocks were poised to bounce back Wednesday, led by a rally in tech stocks before the bell. The Nasdaq had fallen sharply two days in a row but appears on track to recover some of those losses as investors look for buying opportunities.
Here’s were things stand this morning.
Stocks ended mixed Tuesday. Tech stocks sold off further after good news on the vaccine front on Monday had investors worried that the end of the stay-at-home economy is in sight.
Lyft’s (LYFT) business has been slashed nearly in half due to the ongoing pandemic.
The company reported Tuesday that its revenue fell 48% compared to a year ago in the third quarter, to just below $500 million. Active riders fell 44% over the same period, to 12.5 million riders.
Lyft’s latest earnings report shows the ongoing negative impact of the pandemic on its business, but it also illustrates how it has rebounded since the second quarter of this year, when ridership plummeted to 8.7 million riders.
Shares are nearly 6% higher in premarket trading.
