Before The Bell
U.S. stocks closed out the first week of November on a strong up note, as a better-than-expected jobs report and positive developments on the coronavirus front helped lift investor confidence.
Indeed, there have been a number of favorable developments in recent days that should help keep the country’s economic recovery going. Beginning today, travelers from a number of countries (including Canada, Mexico, and most of Europe) will be allowed to visit the United States once again. There will, of course, be ongoing measures including vaccination requirements. However, investors hope that the removal of restrictions will boost the retail sector, as tourists have historically accounted for tens of billions in annual store sales.
Meanwhile, late Friday, the House approved a $1 trillion infrastructure bill that, according to President Biden, should create millions of jobs. Also on the employment front, Friday’s October Jobs report from the Bureau of Labor Statistics showed 531,000 positions filled, topping the consensus estimate of 450,000. Notably, the leisure and hospitality sector led the list, with 164,000 jobs added. Furthermore, September’s nonfarm payroll number was revised upward by 118,000, to 312,000, while the figures for August received a similar boost.
Enthusiasm was further fueled by an announcement from Pfizer (PFE) that its Covid-19 pill (in combination with an HIV treatment) was shown to reduce the risk of hospitalization by nearly 90%. The company’s stock jumped by more than 10% on the news. The pharma giant expects to submit the data to the FDA ahead of the upcoming Thanksgiving Day holiday. The announcement also helped propel a number of travel-related stocks higher, including air carriers, such as United Airlines (UAL) and Delta (DAL), as well as cruise ship operators such as Carnival Corp. (CCL) and Norwegian Cruise Line (NCLH). Also, the online travel company Expedia (EXPE) saw its shares jump by nearly 16% on rising travel demand.
Another positive sign for investors was last week’s announcement from the Federal Reserve that it was confident enough in the economy to start tapering its bond purchases by about $15 billion later this month. The lead bank is targeting the middle of next year to completely end its $120 billion-per-month program.
Altogether, the Dow Jones Industrials ended Friday’s session with a gain of 203 points, or .6%, pushing it to a new high. Meanwhile, the broader S&P 500 advanced 17 points (.4%), marking a seventh-consecutive up session, while the tech-heavy NASDAQ tacked on 31 points for a gain of .2%. Nearly all of the major market sectors were in the green, led by energy (+1.4%), industrials (1.0%), and Utilities (.9%). Health stocks were the only decliners on the session, falling about 1%. The European bourses ended in positive territory, with France’s CAC-40 tacking on .8%, Germany’s DAX up .2%, and the U.K.’s FTSE 100 gaining .3%. Elsewhere oil prices also closed up, with light sweet crude advancing nearly 3%, to about $81.15 a barrel. Although it lost a little ground for the week, the commodity is up more than 65% for the year to date, reflecting the ongoing global economic recovery.
As we look to the new trading day, stocks in Asia had a mixed session with a slight downward bias, and the European bourses are trending in similar fashion. Meanwhile, U.S. stock futures are suggesting the major indexes will continue their upward push, while crude oil is up a little over half a percent.
This week, investors will be closely reviewing the latest reports on producer and consumer price inflation, which come out Tuesday and Wednesday, respectively. Meanwhile, third-quarter earnings results continue to pour in from Corporate America. This week brings the latest financial releases from a number of leisure-related names that bear watching including Walt Disney (DIS), Trip Advisor (TRIP), Marriott Vacations (VAC), and AMC Entertainment (AMC).
– Mario Ferro
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
