4:05 pm: US equities close at record highs
US stocks closed at record highs as Inc () started to roll out its coronavirus vaccine in the UK.
Also driving market sentiment were ongoing negotiations between Democrats and Senate Majority Leader Mitch McConnell to pass a fiscal stimulus bill and aid package from small businesses.
On the day, the Dow Jones Industrial Average rose 104 points, or 0.35%, to 30,178. The S&P 500 jumped 0.28% to 3,782 (first time above 3,700) and the tech-heavy Nasdaq increased 0.50% to 12,582.
12:15 pm: , BioNTech both gain after UK patient gets vaccine
The Dow shook off a sluggish open, climbing out of a near-100 point hole to a gain of 92 points, 0.3%, to hit 30,162.7 just after noon ET. The Nasdaq Composite was up 11.7 points, 0.1%, to 12,532 and the S&P 500 gained 6 points, 0.2%, to 3,698.
“The mood on Wall Street is lacklustre and the major equity benchmarks are a touch higher,” CMC Markets UK analyst David Madden noted. “…the health crisis is still a worry but that is being balanced out by the prospect of a stimulus package.”
Pfizer Inc () and BioNTech SE (NASDAQ:BNTX), which saw their vaccine given to a patient in the UK this morning, picked up 2% and 1.6%, respectively.
9:43 am: Wall Street opens in the red
As expected, the main Wall Street indices were all lower in the opening minutes of Tuesday’s session amid doubts over a new US stimulus package and rising cases of COVID-19 across the country.
Shortly after the opening bell, the Dow Jones Industrial Average was down 0.15% at 30,024, while the S&P 500 fell 0.26% to 3,682 and the Nasdaq dropped 0.13% to 12,503.
A cocktail of uncertainties over the economy, be it stimulus or the outcome of Brexit negotiations, seems to have given traders pause for thought following recent rallies, while others may also be looking to let their foot off the pedal as Christmas edges closer.
“We may be heading into the festive period but we’re a long way from officials easing their way into the holiday season. Everywhere you look, negotiations are underway to prevent a variety of very undesirable outcome, whether that be no-deal Brexit, US government shutdown, the expiration of Covid relief measures or the failure to pass the EU budget and relief package”, said Craig Erlam as OANDA.
“One thing they all have in common – apart from having significant economic consequences at a time we least need them – is that they all need to be resolved by the end of the year. The other thing they all have in common is they’re being negotiated by officials that love an eleventh hour deal. These people thrive at a minute to midnight, which doesn’t bode well when it comes to festive plans for anyone involved”, he added.
However, Erlam also said that should things work themselves out, the new year could be a good one for markets.
“On the one hand, this means there’s a multitude of downside risk for markets that have performed exceptionally well since the start of November. It’s not all doom and gloom though. That also means that, should everything pan out as it should – and is expected to – stock markets could get a nice boost into the end of the year. Perfect timing for Santa rally enthusiasts”, he said.
Another area that could boost markets earlier than years end is the FDA’s meeting on Thursday, which could see the regulator approve the /BioNTech vaccine for use in the US.
8:00 am: Wall Street to head lower
US stocks are expected to open mostly lower despite news of a new initiative to agree fresh stimulus measures, as doubts over whether the package is viable combined with rising cases of COVID-19 in the US to overshadow any optimism.
Spread betting quotes indicate the Dow Jones industrial average will open about 80 points lower at around 28,890 while the broader-based S&P 500 is expected to slide 23 points to 3,669.
The tech-heavy Nasdaq Composite is tipped to defy the trend and open 19 points firmer at 12,539.
On the subject of tech stocks, electric cars maker Tesla has indicated it will raise up to US$5bn through the sale of new stock via an “at the market” offering programme.
Demand for the company’s shares has been insatiable of late, with the shares up 13% over the last three days. It’s only about three months since the stock market glamour stock whacked out US$5bn in shares to the market.
Chinese search engine and social media giant Baidu is travelling in the opposite direction, buying back shares from the market. It announced today it would increase its share buyback programme by US$1.5bn to US$4.5bn.
In the old school sector of the stock market, has opted to exercise its option to buy up the rest of Big River Steel for US$774mln – roughly the amount Elon Musk keeps in the coffee-cup holder well of his Tesla.
The only economic reports scheduled for release in the US today are the NFIB’s small business survey for November and the final productivity and unit labour cost readings for the third quarter, according to Daiwa Capital Markets.
“Regarding the latter, while the second estimate of GDP growth was unrevised, Daiwa America chief economist, Mike Moran, thinks that productivity will be revised down 0.8ppt to 4.1% AR [annualised rate] because of an upward revision to hours worked. Neither of these reports are likely to move the market, so the focus for investors will remain on any progress on fiscal stimulus negotiations,” Daiwa said.
Talking of which, Chris Beauchamp at reckons the rise in the number of coronavirus (COVID-19) cases has lit a fire under US lawmakers, who are now talking about revising ideas of a stimulus package, albeit well below the US$900bn that was being talked about in the dog days of summer.
“Even if the bill does go through, the lack of a ‘trillion’ in the headline could mean markets greet it with a collective shrug, deeming it insufficient to provide a real boost for the US economy,” Beauchamp suggested.
Four things to watch for on Tuesday:
- In the company diary, Jack Daniel’s and Chambord maker Corp (NYSE:BFB) is scheduled to deliver figures for its second quarter
- Share price reaction will be eyed from auto parts group AutoZone Inc () after its first quarter earnings topped forecasts despite disruption arising from the pandemic
- On the macro front, the final non-farm productivity reading for the third quarter of the year is expected to show a fall to 5% from 10.6% in the second quarter
- Meanwhile, the NFIB business optimism index is predicted to show a rise to 105 in November from 101.4 in October