Friday November 13th

13-11-2020

The Dow is set to rise 200 points to end a volatile, but winning week

U.S. stock index futures were higher early Friday as investors bet again on stocks that would benefit from a potential effective vaccine and economic recovery next year. Shares of Disney gained 4% in premarket trading after reporting better-than-expected results. Shares of Carnival Corp., United Airlines and Boeing gained in premarket trading, capping big gains for the week. Dow Jones Industrial Average futures traded 202 points, or 0.7%, higher. The move implied an opening gain of about 220 points. S&P 500 futures gained 0.7%. Nasdaq 100 futures also rose 0.7%. “This week’s positive vaccine news is a game-changer in our view, as it allows the market to look through the recent surge in COVID-19 cases to the impending end of the pandemic and broader reopening of the economy,” wrote Marko Kolanovic, JPMorgan’s head of macro quantitative and derivatives strategy, who was among the first to call the market’s turn in March. The Dow is up 2.7% for the week so far after Pfizer’s news on Monday that the vaccine it is developing with BioNTech was more than 90% effective in a trial. This caused a rotation into the cyclical stocks that would benefit from an economic comeback next year. Investors dumped technology shares which have held up during the pandemic. However, mid-week the rotation paused as traders worried that a rising number of coronavirus cases could hit the economy significantly before a vaccine gets here. On Thursday, the Dow dropped more than 300 points during the regular session, notching its second straight daily decline. The broader S&P 500 pulled back 1%, leaving it just 0.8% higher for the week. The Nasdaq Composite is down 1.6% for the week. The pause in the rally this week came as the number of coronavirus cases, and hospitalizations, keeps climbing in the U.S. A CNBC analysis of data compiled by Johns Hopkins University showed average daily new cases are up by at least 5% over the past week in at least 47 states. Hospitalizations, meanwhile, rising in at least 46 states. Sentiment on Thursday soured even further after Federal Reserve Chairman Jerome Powell said the country’s economic outlook remained uncertain. “With the virus spreading, the next few months could be challenging,” he said. The resurgence in coronavirus cases has also led some parts of the country to re-adopt stricter social-distancing measures. In Chicago, Mayor Lori Lightfoot asked residents to cancel their Thanksgiving plans and stay indoors as cases rise in the city. In New York state, Gov. Andrew Cuomo said new curfews on bars, restaurants and gyms will take effect on Friday. Phillip Colmar, partner at MRB Partners, wrote in a note that the global economic recovery “will be sustained, but the V-shaped portion is over, and we have already transitioned to a slower pace of two-steps forward and one back.” Shares of Dow members Disney and Cisco rose sharply in after-hours trading after both companies reported quarterly results that beat analyst expectations. Disney gained as the company said it now has 73 million paid subscribers for its streaming service, Disney+. The media giant also reported a smaller-than-expected loss for the quarter. Cisco popped more than 6% on the back of strong earnings and revenue. The company also issued better-than-expected guidance for the current quarter. Stocks in Asia-Pacific were mixed on Friday as coronavirus cases continue to surge in the U.S., dimming optimism from positive vaccine news. Mainland Chinese stocks saw losses by their close. The Shanghai composite declined 0.86% to around 3,310.10 while the Shenzhen component dipped 0.272% to about 13,754.55. Hong Kong’s Hang Seng index closed fractionally lower at 26,156.86. In Japan, the Nikkei 225 shed 0.53% to close at 25,385.87 while the Topix index fell 1.33% to end its trading day at 1,703.22. South Korea’s Kospi, on the other hand, added 0.74% to close at 2,493.87. The Taiex in Taiwan also rose 0.39% on the day to 13,273.33. Oil prices fell on Friday, pressured by fears about a slow recovery in the global economy and fuel demand due to rising coronavirus infections, but hopes for a vaccine kept the market on track for a second straight weekly gain. Brent crude was down 36 cents, or 0.83%, at $43.17 a barrel. U.S. West Texas Intermediate (WTI) crude futures fell 48 cents, or 1.17%, to $40.64 a barrel. For the week, both were headed for a surge of about 9%. Gold held steady in a narrow range on Friday, with optimism over a COVID-19 vaccine countered by market concerns about its rollout as global infections continue to mount. Spot gold were little changed at $1,877.30 per ounce but was down 3.7% for the week, heading for its worst weekly loss since September after the initial vaccine euphoria dented safe-haven investor demand. U.S. gold futures were up 0.2% at $1,877.60.