Before The Bell
The stock market, which suffered a mild setback on Monday, with the Dow Jones Industrial Average falling by 272 points, reversed course yesterday and right from the opening bell rallied strongly, with the blue chips racing ahead by 445 points in the first hour of trading. Optimism on the vaccine front was a big early factor in the market's rise, as was a pickup in construction spending announced early in the latest session.
Meanwhile, in some economic news that was more mixed, the Institute for Supply Management said that its manufacturing index had come in at 57.5% in November. While that level suggested the industrial sector was still gaining traction (well exceeding a neutral reading of 50.0%), it was doing so at a slower pace than in October when the level was 59.3%. (Expectations had been for 58.0%.) Negative factors in November included higher worker absenteeism and temporary plant closures, both resulting from the rash of COVID-19 cases suffered in recent weeks.
On Wall Street, the DJIA rally faded but the day still ended up 185 points or 0.63%. Things were better on the S&P 500 index, which was positive by 41 points, or 1.13%. The NASDAQ, meantime, was a 156-point gainer, or 1.28%. Gains were driven by big tech names, such as Apple Inc. (AAPL) and electric car maker Tesla (TSLA). Meantime, another Dow component, UnitedHealth (UNH), was up strongly.
It seems that Wall Street's ability to look past the near-term COVID-19-related troubles is driving equity prices higher.
Looking ahead, the bulls still hope to fashion a year-end rally, although securing one might be more difficult now given the strong gains tallied in November, which might have induced some investors to take a few chips off of the table. Positive news included Fed Chair Jerome Powell again noting in Congressional testimony the importance of getting a new stimulus package in Washington, and pressure has seemed to build for at least a half-a-loaf measure to pass. Today’s market could open lower, as U.S. stock futures sold off a bit in after-hours trading, and at this writing the S&P, Dow, and Nasdaq futures are down 11.75, 134.00, and 52.00 points, respectively, (or by about .32%, .45%, and .42%).
– Harvey S. Katz, CFA
At the time of this article's writing, the author had positions in AAPL.
