Before The Bell
Wall Street will resume trading shortly following a rather extended layoff, given the early close on Christmas Eve and the full-day cessation of activity on Christmas. And it will do so with some optimism and one key concern. On the plus side are the continuing distribution of COVID-19 vaccines and the monetary support from the Federal Reserve. Countering these positive items had been the uncertain fate of the coronavirus-prompted fiscal stimulus package and the slowing in the nation's economy as the disease resumes its worrisome spike. However, last evening, the President signed the COVID-19 bill after earlier having expressed opposition to it. The equity futures are rallying in the pre-market hours in response to this welcome action. At the same time, COVID-19 is still spreading rapidly.
On this latter count, it appears to be a given that a further surge in the pandemic will occur in the coming few weeks, both because of the new variant making its way through the United Kingdom, which likely will come here, and also because the sharp increase in air travel around the Christmas and New Year's holidays could well prompt increases in the incidence of this infection in January. Couple that with the slower-than-hoped-for distribution of the vaccines in some states and the market could face potential headwinds as 2021 gets under way.
As to economic events on the calendar this week, we will get a look tomorrow morning at what the public thinks of the goings on in business activity, when the Conference Board release its survey on consumer confidence for December. Pending home sales and the Chicago area Purchasing Managers will issue their findings on Wednesday. Please note that the bond market will close at 2:00 PM (EST) on Thursday ahead of New Year's holiday, but that the stock market will end matters at the regular time before closing on Friday, so traders can do last-minute adjustments to their portfolios.
Regarding the equity markets, the major indexes are at or very near record high ground. Specifically, the Dow Jones Industrial Average will begin trading at 30,122, or less than 150 points off of its all-time high after a 70-point advance last Thursday, while the S&P 500 will start the morning at 3,703. Finally, the NASDAQ, 2020's big winner begins the new session at 12,805. It closed out last week with a 34-point gain. Helping the market last Thursday was the finalization of the Brexit deal. For the year to date, the Dow is up 5.8%, the S&P 500 14.6%, and the NASDAQ an eye-catching 42.7%.
Looking ahead at the new day which will not have any business issuances of note, following a busy week before, the early action in the futures Sunday evening was modestly positive, having turned higher after the President signed the relief package. The futures are now building on those early gains, presaging a stronger opening when trading resumes a little later this morning.
– Harvey S. Katz, CFA
At the time of this article's writing, the author did not have positions in any of the companies mentioned.
