Another Round of Encouraging Vaccine News Lifts Stocks…..
U.S. stocks closed higher to kick off the week, as the rotation from growth to value stocks continued, due in large part to another round of decisively-positive COVID-19 vaccine trial results, this time courtesy of Moderna. The optimism surrounding the vaccine news provided a boost to cyclically-oriented stocks that struggled during the COVID-19 pandemic’s disruption as they continued to find demand, while those that performed well lagged. The economic week kicked off with an underwhelming read on manufacturing output in the New York region, while earnings season is set to end with a bang as a few retail heavyweights are set to report earnings results. M&A news poured in, with Dow member Home Depot agreeing to acquire HD Supply for an enterprise value of nearly $8.0 billion, while PNC Financial Services agreed to acquire Banco Bilbao Vizcaya Argentaria SA’s U.S. banking operations for $11.6 billion. Treasury yields were mostly higher as bond prices slipped, while the U.S. dollar dipped. Crude oil prices rallied and gold was lower. Asia rallied broadly on news of a monumental trade pact in the region, while Europe closed higher as Energy and Financials provided the boost.
The Dow Jones Industrial Average gained 471 points (1.6%) to 29,950, the S&P 500 Index was up 42 points (1.2%) at 3,627, and the Nasdaq Composite gained 95 points (0.8%) to 11,924. In heavy volume, 1.1 billion shares were traded on the NYSE and 3.9 billion shares changed hands on the Nasdaq. WTI crude oil traded $1.21 higher at $41.34 per barrel and wholesale gasoline added $0.02 to $1.15 per gallon. Elsewhere, the Bloomberg gold spot price slid $1.88 to $1,887.32 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—fell 0.2% to 92.61.
Regional manufacturing data misses to commence the economic week…..
The Empire Manufacturing Index, a measure of activity in the New York region, unexpectedly declined to 6.3 in November from 10.5 in October, compared to the Bloomberg forecast of an increase to 13.5. However, a reading above zero denoting expansion. The report marks the fifth-straight month of expansion, as employment growth accelerated but the expansion in new orders decelerated.
Today’s report kicked off the economic week that will likely continue to take a back seat to the developments on the COVID-19 fight, but the docket is poised to deliver some key reads on housing, consumer activity, industrial activity and employment. Tomorrow will bring what could be the headlining data point for the week, the October retail sales release, which will be joined by the November NAHB Housing Market Index—a gauge of homebuilder sentiment—that will commence a string of housing reports that will include October data on housing starts and building permits and existing home sales. The Fed’s industrial production and capacity utilization report will also come out on Tuesday and initial jobless claims for the week ended November 14th will highlight the second-half of the week, along with the October Index of Leading Economic Indicators.
Treasuries were mostly lower, with the yield on the 2-year note little changed at 0.18%, while the yield on the 10-year note gained 1 basis point (bp) to 0.91%, and the yield on the 30-year bond added 2 bps to 1.66%.
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