Before The Bell
Wall Street rallied strongly last week, buoyed by the end of an exhausting political campaign that resulted in the election of Joe Biden as our 46th President. However, not only was it a tiring campaign, it also was a most contentious one, with the final result now about to be challenged by the President in court after he seemingly lost a narrow race to the former Vice President. The consensus among legal experts is that this attempt at a challenge will fail.
The Street also rallied in the hope that we would continue to see divided government in the nation’s Capital. Since 2018, the White House and the Senate have been in Republican hands and the House in control of the Democrats. Now, unless these challenges are successful, the Presidency and the House of Representatives will be in Democratic hands, while the Senate, which still is up in the air, could well remain narrowly in Republican control. Wall Street likes divided government as policies tend to veer toward the center, which is appealing to most investors.
Meanwhile, after rallying strongly from Monday through Thursday, an overbought stock market held steady on Friday, even as the Government reported another solid increase in non-farm payrolls for October and a drop in the jobless rate to 6.9%. That was notably lower than the consensus forecast. Overall and in spite of the strong showing in the most recent week, in which the Dow Jones Industrial Average rallied 6.9% and the S&P 500 jumped 7.3%, there is some uneasiness about the election and the rapid-spread of COVID-19 infections.
Regarding COVID-19, daily cases have soared above 130,000, with total infections in the United States now hitting 10 million, while deaths in our country are at 240,000. Still, the jobs report was strong and unless there are major surprises on the election front in the days to come, the possibility of divided government and the growing likelihood that a meaningful and comprehensive fiscal stimulus package will emerge from Congress in the coming weeks could keep the buyers in the game.
Finally after an eventful week, with several key reports issued, the election in the books, and the FOMC having held its latest meeting, the calendar will be comparatively light in the five days ahead, with the lone monthly reports of note being the Consumer Price Index and the Producer Price Index. Also, Thursday will see the weekly jobless claims figures.
Meantime, ahead of all this, and boosted strongly by the news that drug giant Pfizer (PFE) now has a COVID-19 vaccine candidate that it claims is 90% effective and that it could have 1.5 billion doses of it available by 2021, the U.S. equity futures are soaring, with the Dow ahead by some 1,200 points. PFE shares are suggesting an opening gain of some 8% at this hour.
– Harvey S. Katz, CFA
At the time of this article's writing, the author had positions in PFE.
