Stocks continued to rise as two big coronavirus vaccine players are progressing in their approval processes.
The S&P 500 rose 0.2%, even as large-cap tech stocks fell, with the NYSE FANG Index down a few tenths of a percentage point. Still, most sectors saw healthy stock gains. The 10-Year Treasury yield, up to 0.86% from 0.71% about a week ago, took a breather, posting an essentially flat move Friday.
Moderna (MRNA) - Get Report said its phase three trial for its coronavirus vaccine is moving along, as the company enrolls thousands of patients. The stock rose as much as 1.5% before that gain moderated. Biotech analysts at Morgan Stanley say the next 6 weeks will be pivotal regarding approval process for Moderna, which is hoping its vaccine is ready in December.
A hint that investors indeed see an incrementally higher likelihood of a full economic reopening sooner rather than later is that these two stocks are moving up robustly Friday on these announcements. In the absence of fiscal stimulus for the time being, and with small businesses not fully reopened, widely distributed vaccines would act as its own economic stimulant. The economic recovery has been speedy all year but has slowed down of late. investors are generally confident that the next year or so will see a return to normalized economic activity.
Economically-sensitive stocks were mostly rising. Banks, oil, most consumer discretionary, and some industrials were up a few tenths of a percentage point. The S&P 500 is up almost 7% in the past month in a broad sector rally,
Stocks were not moving up aggressively. Higher bond yields pressure stock valuations, which is weighed against the positives those bond yields reflect in the economy.
Another potential negative: Vice President Biden’s lead over President Trump in the polls shrunk from around 10 percentage points to about 8 points after Thursday’s debate. Whether the market is ‘pro-trump’ or ‘pro-Biden’ has been difficult to discern, but many on Wall Street see Biden’s willingness to deploy fiscal spending as a major economic positive in the current environment.
"The massive extra stimulus of up to $3trn wanted by Democrats in January would buoy the markets and would have investors think about a broader-based economic recovery – rather than a narrower, tech-heavy one,” wrote Nigel Green, CEO of deVere Group in emailed remarks to reporters.
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