Before The Bell - The stock market, which pressed higher to begin this week, entered the penultimate session of this five-day span on a mixed note, with the Dow Jones Industrial Average, a big winner several days earlier on positive COVID-19 vaccine news, dipping at the open, while the NASDAQ pressed forward. Among the early factors in the uneven trading was a better-than-expected report on weekly unemployment claims. Such filings came in at 709,000 for the latest seven days, 48,000 below the prior week's tally and under expectations.
At the same time, the Labor Department reported that the Consumer Price Index was unchanged in October after rising by 0.2% in September. Survey components were mixed, with many offsetting increases and decreases. In all, after falling sharply in April, as much of the economy shut down to help quell the coronavirus, prices rebounded in June, July, and August. Now, more contained price changes are evident, as we slowly get back to normal. That said, the CPI garnered little reaction on Wall Street.
Meanwhile, after that mixed start, the Dow Industrials remained lower, even falling further throughout the session, reaching its nadir just after 3:00 (EST), when it was off just under 500 points. At that time, a late rally ensued that brought the final deficit in the blue chips to 317 points. The S&P 500 Index followed a similar path, while the NASDAQ, up in the morning, fell moderately after lunch, closing down by 77 points. It seems that the vaccine rally faded and was replaced by new fears about the spread of COVID-19.
As for influences on this day and going forward, the optimism on the recently announced Pfizer vaccine did fade just a bit, on the realization that widespread distribution of this preventive will take a number of months. Also, there is no fiscal stimulus package yet on the horizon, and we may not see one until the new Congress meets in early 2021. In fact, with the makeup of the Senate uncertain given the two runoffs scheduled to take place that month in Georgia, we could well be at least two months from some movement on stimulus.
Then, there is the surge in the coronavirus, with the latest day seeing more than 144,000 new cases of this disease, with the seven-day moving average of such infections now just below 130,000. Finally, there are the jobless claims. True, the latest week's data was supportive. However, what happens when the soaring COVID-19 caseloads start affecting the economy? Not surprisingly, so-called reopening-sensitive stocks, such as United Airlines Holdings (UAL), were especially hard hit.
Now, after that mild retrenchment, the market will open shortly. And following some mixed early trading in the after-hours session last evening, the equity market seems set to begin matters this morning to the upside, with further election clarity in hand, as Arizona now has been called for President-Elect Joe Biden. Just Georgia and North Carolina remain to be called. - Harvey S. Katz, CFA