Commenting on the ahead-of-schedule Coronavirus vaccine push and today’s trading, Gorilla Trades strategist Ken Berman said:
Q3 2020 hedge fund letters, conferences and more
The Vaccine Push Continues Aids Wall Street's Stability
The major indices are all trading in the red at midday as stocks pulled back on Wall Street following yesterday’s modest rally to new all-time highs. While the number of COVID infections, hospitalizations, and deaths remain high in the U.S. the ahead-of-schedule vaccine push continues to aid stability on Wall Street. Moderna’s vaccine candidate got very close to being the second serum to be approved for emergency use in the U.S. by the FDA, boosting stocks in pre-market trading in the wake of a slightly bearish overnight session.
The bullish German IFO Business Index also provided support overnight but the renewed Brexit fears put pressure on risk assets in European trading. The stimulus talks in Washington still haven’t yielded a deal despite this week’s progress, but rumors suggest that an announcement is likely this afternoon, which could further reduce volatility in stocks. Choppy and hectic trading could continue throughout the session, as not only a slew of options contracts expire today, but Tesla (TSLA, + 1.0%) is trading outside of the S&P 500 for the last time, leading to elevated trading volumes across the members of the index.
Market Wrap
Dow: 30,097, - 206 or 0.7%
S&P 500: 3,695 - 27 or 0.7%
Nasdaq: 12,714, - 51 or 0.4%
Russell 2000: 1,989, + 11 or 0.6%
Market breadth has been relatively strong this morning thanks to small-caps, with decliners only outnumbering advancing issues by a less than 6-to-5 ratio on the NYSE at midday. Only 2 stocks hit new 52-week lows on the NYSE and the Nasdaq, while 326 stocks hit new 52-week highs. The major indices have been trading below their daily VWAPs (Volume-Weighted Average Price) for most of the morning session, pointing to intraday selling pressure. The key sectors are almost all in the red at midday, with only real estate stocks and utilities sporting gains, and the fact that cyclicals are clearly lagging behind the large-cap benchmarks is a negative sign for the rest of the day. Stay tuned!
