Before The Bell
The U.S. stock market turned in a mixed performance yesterday, as investor sentiment became a bit more cautious. Now, in the overnight hours, the international markets have come under some pressure, as well. In Asia, the Nikkei moved lower, while in Europe, the FTSE 100 has retreated. On our shores, the futures are currently indicating a soft opening.
Investors clearly have a few concerns. Over the past few weeks, Wall Street reacted quite favorably to news that a coronavirus vaccine had finally been developed. However, on closer inspection, the vaccine will be difficult to distribute, as it must be stored at a very low temperature. In addition, the medicine is not expected to be widely available to the general populace for a number of months. In short, the pandemic is far from over. In fact, the number of cases continues to rise across the country, and restrictive measures are currently going into effect in key locations, such as California. Given the deteriorating situation, it seems probable that the pandemic will continue to weigh on the economy well into the first half of 2021. Some investors who had become overly enthusiastic may be starting to adjust their assumptions.
Elsewhere, a roughly $900 billion stimulus bill is currently under consideration in Washington. While this is a positive development, some on Wall Street may have been hoping for a much larger package. In addition, further aid may not follow in the spring, given the divided political climate.
In economic news, today will be relatively quiet. Tomorrow, the wholesale inventories report for October will be released, along with the EIA’s latest weekly crude oil inventory numbers. On Thursday, the employment situation returns to the spotlight, as investors get a look at the most recent initial jobless claims issuance. It should be mentioned that at the end of last week, a disappointing November employment report showed that the labor market is still soft. However, Wall Street shrugged off the news at the time. Elsewhere, the third-quarter earnings season is finally over. But corporations that adhere to non-calendar fiscal years are reporting results. Earlier this morning, we heard from AutoZone (AZO). Tomorrow, Campbell Soup (CPB) will put out its numbers. Later this week, widely-held names, Adobe (ADBE), Lululemon (LULU), and Costco (COST) will weigh in with their reports.
Technically, the stock market advanced sharply in November, and got off to a constructive start in the first days of December. Equities often tend to do well during the holiday season. However, give the current level of the market, it remains to be seen if the bulls can secure additional gains from here.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
