Wednesday November 11th

11-11-2020

The Dow is set to jump 200 points as vaccine market rally stretches to a third day

U.S. stock index futures rose on Wednesday with the Dow Jones Industrial average set to gain for a third day after news of an effective Pfizer Covid-19 vaccine earlier this week sparked hopes of a return to normal economic activity. Dow futures added 209 points, or 0.7%. The move implied an opening gain of about 200 points. S&P 500 futures were up 0.7%. What was different on Wednesday was that technology stocks were bouncing back. Nasdaq 100 futures were up 0.9%. Alphabet and Microsoft both traded 1% higher in the premarket. Apple gained 0.9%. Netflix climbed 0.6%. Facebook and Amazon rose 0.7% each. The Dow was coming off two back-to-back strong sessions, jumping 262 points on Tuesday and surging more than 800 points on Monday following Pfizer and BioNTech’s announcement about their more than 90% effective Covid-19 vaccine. The news caused investors to move out of technology names and stay-at-home stocks and into cyclical stocks that hinge on a recovering economy, causing Nasdaq names to underperform this week. Eli Lilly’s antibody drug was cleared by the Food and Drug Administration for emergency use late Monday. The agency said the drug could be used to treat mild-to-moderate cases of Covid-19 in patients who are older than 12 years old. The vaccine and antibody drug news comes as the United States once again topped its prior day record of daily new Covid-19 infections, on a seven-day average, while also crossing the bleak milestone of more than 10 million cases nationwide on Monday. The seven-day average of daily new cases Monday was 108,964, a 37% increase from a week ago, according to a CNBC analysis of data from Johns Hopkins University. Both the Dow and S&P 500 hit intraday record highs on Monday, but closed off their highs. The Dow is up about 4% this week. The energy sector is up 17% this week, as oil prices gain on hopes of improving demand. The financial sector has risen about 9% since Monday. “The leadership rotation away from technology and Fangs toward broader market plays including small caps, cyclical sectors and international stocks strengthened for a second consecutive day,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC. “Since the vaccine announcement before yesterday’s open, investors have been selling ‘stay at home stocks,’ mostly technology and communications, and buying ‘economy re-opening stocks.’ The continuation of this trend [Tuesday] has only convinced more investors this new trend may persist,” he added. Stocks in Asia-Pacific were mixed on Wednesday, with tech shares in the region monitored following overnight declines for the sector on Wall Street. In Japan, the Nikkei 225 rose 1.78% to close at 25,349.60 while the Topix index also gained 1.66% to end its trading day at 1,729.07. South Korea’s Kospi added 1.35% to close at 2,485.87. Mainland Chinese stocks declined on the day. The Shanghai composite shed 0.53% to around 3,342.20 while the Shenzhen component declined 1.952% to about 13,720.17. Hong Kong’s Hang Seng index dipped 0.28% to finish its trading day at 26,226.98. Oil prices climbed over 1% on Wednesday, after an industry report showed U.S. crude inventories have fallen more than expected, while hopes of an effective Covid-19 vaccine continued to bolster sentiment. Brent crude futures were up 48 cents, or 1.1% to $44.09 a barrel at 0445 GMT, while U.S. West Texas Intermediate (WTI) crude futures also rose 48 cents, or 1.2%, to $41.84 a barrel. Both benchmarks gained nearly 3% on Tuesday. Gold prices edged higher on Wednesday, supported by a softer dollar, while concerns about surging Covid-19 cases in the United States and logistical challenges over the mass roll-out of a potential vaccine further bolstered the metal’s appeal. Spot gold rose 0.3% to $1,882.06 per ounce by 0320 GMT. U.S. gold futures were up 0.2% at $1,880.20.