Before The Bell
Wall Street will begin an abbreviated Christmas Eve session in less than a half hour from now, with the Exchanges closing at 1PM (EST) this afternoon. Ahead of this, the futures are pointing to a modestly higher start even though the President has seemingly thrown a wrench into the much-anticipated fiscal stimulus deal by noting his displeasure at the small $600 proposed payment to Americans impacted by the virus-induced recession. He is favoring a $2,000 payment, which drew immediate endorsement by Democratic leadership, but has little support among Republicans. There is little economic news of note today following a large calendar of events yesterday.
As to yesterday's stock market, prices turned up at the open after the government reported a lower jobless claims tally for the most recent week.
The Commerce Department tallied, new weekly jobless filings at 803,000. That was a lower tally than the 888,000 that had been forecast and also was below the level that had been expected. Still, the absolute number was distressingly high. Also, personal income was lower in November, falling 1.1%, while consumer spending dipped into negative territory, as well. Finally, new home sales declined last month, recording its weakest reading since June.
However, in spite of these generally unimposing economic issuances, the stock market got off on the right foot in trading yesterday, rising on optimism that the hoped-for rapid distribution of COVID-19 vaccines from Pfizer (PFE) and Moderna (MRNA) would quickly turn the tide on this global pandemic that has now taken the lives of more than 325,000 Americans and caused illnesses to over 18 million of our citizens. Indeed, the Dow Jones Industrial Average would leap forward by some 275 points by the early afternoon.
The strong gains persisted until the final half hour of trading. Selling toward the close cut the Dow's advance to a closing gain of 114 points. The S&P 500 closed essentially flat, while the NASDAQ was off by 37 points.
Politics is what caused the markets to fade in the stretch. The President’s criticism of the modest stimulus bill could lead to a veto, and possibly even to a government shutdown for a time. Still, markets expect some stimulus measure to be enacted.
Meanwhile, the hoped-for yearend rally seems to still be in focus as the positive trends in place over the past six weeks, or so, should continue into the new year, as momentum is strong and it is risky to fight the tape.
- Harvey S. Katz, CFA
At the time of this article's writing, the author had positions in PFE.
