Before The Bell
The stock market, which had a topsy-turvy session to start the holiday shortened week on Monday, as relief that Congress had finally passed a fiscal stimulus package was offset by worries about a mutated strain of the COVID-19 virus appearing in the United Kingdom, eventually closed that day's trading on a mixed note. Then, the latest day's trading began on another mixed note, with the Dow Jones Industrials falling and the NASDAQ gaining initially. As to this morning's outlook, the futures are suggesting a higher start when trading resumes later this morning after some lower action in the futures last evening. This presumptive early improvement is likely even though the President has threatened to possibly veto the stimulus package as insufficient to meet the needs of U.S. households now under financial pressure...
Regarding yesterday's action, stocks, as noted, started out on mixed footing, with the NASDAQ, underpinned by gains in some technology stalwarts, moving higher throughout the morning. Indeed, at one point, that composite, already up more than 40% in 2020, had tacked on another 98 points before noon was reached on the East Coast. However, the Dow Jones Industrial Average, off all morning, was continuing to press lower, ending the first part of the day down some 125 points.
As for key influences, it was once again virus worries outweighing passage of the pandemic relief bill. Specifically, the Street was under stress that a new variant strain of COVID-19 had emerged in the U.K. Wall Street is worried that this new strain could travel across the pond and, as it did during the spring, wreak havoc on the East Coast of our country. This mutant virus has induced many nations around the globe to ban travel from Great Britain. Thus far, our country has not gone along with that ban, although calls to do so are increasing.
On the disease front, BioNtech (BNTX) and Pfizer (PFE) have indicated that it is highly likely their jointly developed vaccine would induce an immune response to deal with the new strain. In economic news, meantime, a revised third-quarter GDP report showed that economic growth in the period came to 33.4%. Earlier, that figure had been estimated at 33.1%. Things have changed rather notably since the end of that quarter and growth in the current period will be just a fraction of that record total, in our view.
Meanwhile, the stock market continued on this divergent path during the afternoon, before the Dow finally closed off by 200 points. The NASDAQ, though, boosted by selective strength on the tech front, managed to close in the green. Finally, on the economic beat, the National Association of Realtors reported that sales of existing homes eased slightly in November, pulling back by 2.5%. Still, such sales have perked up for the most part this year. Today, we will get data on consumer sentiment and new home sales.
– Harvey S. Katz, CFA
At the time of this article's writing, the author had positions in PFE.
