Before The Bell
The stock market, following a heavy week of economic news, with more to follow, and a busy week stretch with political developments on the fiscal stimulus front, appears set to begin the final trading day of the week with modest gains at the opening of trading. That improvement follows a night of generally lower action as optimism seems to be building again about the imminent passage of a stimulus package in the Congress.
As for the key developments this week, they were highlighted by some pivotal economic news items, such as the latest FOMC meeting in which the Federal Reserve, as expected, kept interest rates unchanged, but did pledge to continue its commitment to underpinning the economy with generous asset purchases. In other business tidings, we saw data showing slight increases in housing starts and building permits in November and slight gains in industrial production.
On the other hand, yesterday brought more dour news on the employment front, as the nation reported that first-time jobless filings had increased once more over the latest seven-day stretch. In all, 885,000 workers saw their jobs eliminated. That was up from a revised tally of 862,000 the week before. The rising cost of the COVID-19 pandemic, which is raging out of control with record infections, hospitalizations, and deaths, is now again taking a major toll on the economy and could well cause GDP growth to shrink to just 3%-5%, or less, in the current quarter.
Now, later this morning, the Conference Board will report on the Leading Economic Indicators for November. As to the stock market amid all of this, its focus has been largely on the attempt to get a slimmed-down fiscal stimulus bill through a polarized Congress. Expectations are that a package will be adopted in just a few days, or even sooner. The stock market, emboldened by this encouraging prospect, rallied nicely at the open of trading yesterday and then continued to press ahead for the balance of the session.
In all, the Dow Jones Industrial Average, with a strong close, would add 149 points, while the NASDAQ, lifted by stealth gains in Tesla (TSLA), would surge 107 points. Not only were the stimulus talks helpful, but there also was upbeat news on the vaccine front, where expectations had been high all day that drug company, Moderna (MRNA) would get approval from an FDA panel to distribute its vaccine, thereby joining Pfizer (PFE) in that regard, with the latter getting the nod last week.
Then, after the close of trading, Moderna did get the go ahead for its vaccine candidate to get Emergency Use Authorization. The shares rallied during the day, but eased in after-hours activity on profit taking. Finally, with yesterday's market gains, the Dow, the S&P 500, and the NASDAQ are all at record highs as we end the week. Thus, the Santa rally seems alive and well.
– Harvey S. Katz, CFA
At the time of this article's writing, the author had positions in PFE.
