Before The Bell – The stock market, which suffered through a difficult September and October, reversed course through the first two weeks of November, eclipsing the losses of the previous two months in the process. Then, after another stealth increase in the key indexes on Monday, which included a 470-point surge in the Dow Jones Industrial Average, the blue chip index reached at an all-time high. In establishing that peak, it would join the S&P 500 and the NASDAQ, which have been routinely setting records this year.
That Monday surge took hold after drug maker Moderna (MRNA) said that it had a come up with a vaccine to prevent COVID-19 that was 94.5% effective. This meant that a second drug manufacturer had been successful in securing such a preventive, with Moderna joining pharmaceuticals behemoth Pfizer (PFE) in that quest. However, on Tuesday concerns that the still raging coronavirus would soon cause lockdowns in this country began to take a toll on the market and modest losses in the major indexes ensued. Mixed economic metrics, headlined by just a nominal gain in retail sales during October, didn't help matters.
Then yesterday, after a higher start by the Dow and some other indexes, which save for the NASDAQ, would last through the morning and into the early afternoon, the large-cap composites would turn lower and sink sharply into the close, ending matters at session lows. The back-to-back setbacks in the equity market would overcome the fast start to the week. It seemed that the selling took hold as Wall Street appeared to have already priced in the good news on the vaccine front.
Meanwhile, the toll from COVID-19 continues to climb, with deaths topping a quarter of a million Americans, while the cumulative number of infections is surging relentlessly toward 12 million. Other news was more uplifting, however, as it was reported that housing starts had hit at an annualized rate of 1.53 million during October, beating estimates of 1.46 million and rising 4.9% year over year. Such strength would seem to imply that housing would be at the forefront of the economic recovery in the months to come.
As noted, the story was less upbeat on the retail side, where sales rose just slightly last month. Still, there was some good individual news, as big box retailer Target (TGT) saw its stock gain moderately after beating revenue and profit estimates in the latest quarter. On the other hand, home improvement behemoth Lowe's (LOW) saw its stock hit hard even though it beat forecasts, but clearly not by enough. The next few weeks will be critical for the retail crowd, as the holiday sales season is close to being upon us.
Among other individual stories, shares of Tesla (TSLA) surged for a second day in succession after news that the iconic electric car maker would soon be added to the S&P 500 Index. Overall, though, the week is no better than mixed at this point, with fresh signs of COVID-19's ability to damage the economy appearing. On point, store closings are gaining traction, while New York City has announced that in-person learning would stop today for the City's students. All in all, it could be a trying few months until these seemingly promising vaccines are ready for mass distribution.
Looking out to a new day now and following a flattish performance by the equity futures in trading last evening, the futures are pointing to a slightly lower opening on Wall Street this morning. Finally, two key economic reports will be out later this morning, as the National Association of Realtors will issue data on sales of existing homes and the Conference Board will report on the leading economic indicators.