The market rally tied to Pfizer’s promising vaccine announcement continued for a third day on Wednesday, with the Nasdaq posting gains for the first time this week, but the dampening prospects of fiscal stimulus and policy action in the coming weeks amid ongoing record-high coronavirus cases could seriously hinder the economic recovery.
The S&P 500 ended the day up 0.8%, while the tech-heavy Nasdaq outperformed the broader market for the first time this week, jumping 2% after shedding nearly 3% on Monday and Tuesday; the Dow was virtually flat.
Among firms leading market gains on Wednesday were tech companies Qualcomm, PayPal and Nvidia, which all plummeted earlier in the week but surged roughly 5% on Wednesday.
Meanwhile, shares of cloud-computing firm Datadog fell 6% despite an earnings beat after a JPMorgan analyst downgraded the stock citing two-straight quarters of revenue deceleration, and Aurora Cannabis tanked 8% after announcing a secondary stock offering.
In a note to clients on Wednesday morning, Goldman Sachs lifted its year-end S&P 500 guidance to 3,700–implying about 4% upside for the index in the next seven weeks, largely due to the likelihood of a divided Congress come January.
Crude oil has rallied on the market’s renewed hope for value-oriented stocks (like those in energy, which is up nearly 20% this week), with U.S. benchmark West Texas Intermediate spiking 2.5% Wednesday morning and hitting a more than two-month high.
Global markets also edged up: The United Kingdom’s FTSE 100 ticked up 1.4%, while France’s CAC 40 added 0.5%, and Japan’s Nikkei 225 ended the day up 1.8%, hitting a nearly 30-year high.
“The big theme is a rebound in growth and momentum stocks following steep underperformance Monday and Tuesday on the back of the Pfizer news… Investors remain a bit whipsawed and diffident by the week’s trading pattern, skeptical of the cyclical rally sustaining but somewhat hesitant to dive right back into growth,” says Vital Knowledge Media Founder Adam Crisafulli, adding that the Veterans Day holiday closed bond markets, which lent itself to a slower-than-usual trading session.
The stock market’s resilience throughout the pandemic and a divisive U.S. presidential campaign has been “remarkable,” Goldman said Wednesday morning, especially in light of the volatility. The market plunged 34% in the first quarter at the height of pandemic uncertainty and later rallied almost 60% from lows in March. Still, the broader economic recovery has been sluggish and key indicators like the labor market are still well below pre-pandemic levels. Experts, meanwhile, have been warning that the next few months could be among the worst for the coronavirus crisis, as gatherings pick up during the holidays. “The next six months are going to continue to be pretty choppy,” Federal Reserve President Eric Rosengren said of the economic recovery on Tuesday. “I hope that we still get a fiscal package, it’s probably not going to come as soon as we were hoping and that does mean that we’re not going to get as robust a growth over the next couple of quarters as we were hoping.”
Despite Alibaba shattering sales records during Singles Day, the firm’s biggest shopping holiday of the year, its shares fell 0.3% as newly proposed antitrust regulation from the Chinese government tanked the stocks of the nation’s largest tech firms by as much as 10% on Wednesday. Hong Kong’s Hang Seng Index ended the day down about 0.3%.
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