Displaying items by tag: vaccine
Pharma Still a Value Play Despite Being a Key Industry in the Pandemic
Most pharmaceutical companies kicked it into high gear to develop the Covid-19 vaccine, but they received very little investor attention…see the full story on our partner Magnifi’s site
Big Banks Say the S&P 500 Will Surge in 2021
One of the big annual market traditions has begun: banks and their analysts put of their year-ahead forecasts. This year has seen a wide range of forecasts, but one thing is becoming apparent—analysts are bullish, and more so than usual. Jefferies has the most aggressive forecast, saying the S&P 500 will close 2021 at 4,250; it is at 3,662 now. Analysts are bullish because of the coming vaccine and central banks which will continue to be accommodative. However, Barclays adds a third consideration—that the economy is doing much better than anyone thought it would be at this point. According to Barclays “with central banks set to remain accommodative for several years, a likely drop in global trade tensions, and unappetizing fixed income returns, we remain overweight risk assets over core bonds”.
FINSUM: Yes valuations are high, but given the overall economic position the US is in (including the vaccine), it is hard not to be optimistic.
2020’s Biggest Stock Losers are Now White Hot
The market has been turned on its head. For the last nine months there has been a clear delineation in the market: stocks that benefit from work-from-home and other social distancing measures thrive, and those shares which did well in the “old” economy struggle. Yesterday, that got turned upside. The market surged on the most legitimate and detailed announcement of vaccine success yet, and that sparked a reversal of fortune for WFH stocks. Despite the Dow rallying almost 5%, the Nasdaq fell well over 1%, showing the strong divergence in shares. Stocks like Boeing, Raytheon, GE, American Airlines, and Delta Airlines rocketed, often jumping by 15% or more. The cruise lines were up by as such as 40%! But the big winners of the year—like Zoom—fell big-time, with Zoom’s shares down 17%.
FINSUM: If you were short the COVID-economy yesterday you did very well. The thing is, this market seems to be getting a little ahead of itself because of the fairly long timeline for approval and distribution of the vaccine.
Promising Vaccine Study Giving Hope to Markets
Markets were up big yesterday. Most of the reason why seemed to be some great indications from an ongoing COVID vaccine study. Moderna seems to have reached a breakthrough in its COVID vaccine trials, and the promising results ensured a bigger study at the end of this month. All stocks that are considered COVID-sensitive, such as airlines and cruise lines, rose on the news. According to Invesco, “The way it’s looking at the moment, it really looks as though a vaccine is the only hope. This thing is not going away”.
FINSUM: That Invesco quote is sad, but appears entirely accurate. COVID does not seem to be fading whatsoever on its own, so a vaccine is the only thing that is going to return the world, including markets and the economy, to normal.
This is All the Market Cares About Right Now
You may be wondering what is guiding the market right now, but in reality it is pretty simple. It is the combination of the prospect for reopening the economy, blended with the early results of vaccines that would help accelerate that process. This morning’s pre-market trading was another sign—new promising vaccine news sent S&P 500 futures up 1.5%.
FINSUM: If you want to predict the market, just pay very close attention to pharma news. Stocks in the sector have seen huge bumps because of vaccine hopes, and it is driving the whole market.