Market Perspective for November 23, 2020

The stock market rallied on Monday thanks to optimism surrounding additional coronavirus vaccine developments announced today. The progress from yet another vaccine manufacturer on preparing a third major vaccine candidate for emergency authorization use from the FDA fueled a positive outlook for stocks.

The major indexes closed with gains across the board. The S&P 500 gained 0.56 percent, while the Nasdaq advanced 0.22 percent. Micron Technology (MU), a maker of memory chips, was one of the Nasdaq’s standout performers for the day. Its shares traded up 4.53 percent in response to an increase in demand for Micron’s cloud data center. The Russell 2000 closed up 1.98 percent today.

The Dow gained 1.12 percent for the day. Monday’s surge in the Dow was bolstered by Boeing (BA) and Chevron (CVX) shares trading up by 5.88 and 6.15 percent. In addition, Walt Disney (DIS) shares traded up 3.53 percent and American Express (AXP) 3.18 percent, which also helped boost the index.

AstraZeneca (AZN) and the University of Oxford announced Monday that their coronavirus vaccine candidate had achieved an efficacy rate above 70 percent in late trials involving only one dose of the vaccine. When a second dose was administered, the efficacy rate shot up above 90 percent, according to the firm. This announcement follows the previous declarations by Pfizer (PFE) and BioNTech (BNTX) that their coronavirus vaccine candidate had achieved a higher than 90 percent efficacy rate and was being submitted for emergency use authorization to the FDA. Pfizer projected that its vaccine candidate would be distributed in some limited way by December. Moderna (MRNA) also presented its own positive news on its coronavirus vaccine’s effectiveness rate at the close of Phase 3 clinical trials a week ago.

News from Regeneron Pharmaceuticals (REGN) that its antibody coronavirus treatment received emergency use authorization from the FDA boosted its shares by 0.4 percent. Combined with promising news on the vaccine front, developments in therapeutics are expected to further accelerate the economic recovery and attract investors to value stocks.

Markets reacted positively to the appointment of former Fed Chief Janet Yellen as Treasury Secretary. Yellen is expected to be a stabilizing influence in the market and is known for her easy monetary policy during her leadership at the Fed. She should face no trouble getting approval having already cleared confirmation hearings for her appointment to the Federal Reserve.

The energy sector also advanced on the day. Crude oil prices reached a three-month high on Monday afternoon. The U.S. price per barrel increased by 1.23 percent to $42.94. Energy Select Sector SPDR Fund (XLE) gained 7.09 percent on Monday.

The 10-year Treasury note gained 0.857 percent on Monday, while 30-year Treasury bonds gained 1.556 percent.

IHS Markit released its manufacturing and services sector survey on Monday, which reflected the strong and relatively quick pace of the U.S. economic rebound. Both indexes from IHS Markit exceeded the consensus expectations. The manufacturing index increased from 53.4 to 56.7 last month. The services index increased from 56.9 to 57.7 over the same time period. The HIS Markit composite index, combining manufacturing and services, likewise increased from 56.3 to 57.9 in October, which marked its highest level in more than five years. Significant increases across these indices indicate a recent and sustained boom in demand for manufacturing and services.

The Conference Board will release its consumer confidence survey on Tuesday. Analysts expect a decline from October’s reading of 100.9 as rising coronavirus cases and the election had a negative impact. The University of Michigan’s advance survey of consumer sentiment for November will be released on Wednesday.

Economists predict new homes sales climbed to an annualized pace of 980,000 homes in October, up from 959,000 in September.

Initial claims for unemployment likely held above 700,000 last week with lockdown policies spreading, but economists expect 22,000 fewer claims than the prior week.

Medtronic (MDT), Autodesk (ADSK), Dick’s Sporting Goods (DKS), Analog Devices (ADI), Best Buy (BBY), Dollar Tree (DLTR), Deere & Co. (DE) and Weibo (WB) highlight a light week for earnings reports.

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