Stocks mostly lower as tug of war continues between vaccine optimism and rising COVID-19 cases

S&P 500, Dow pull back from record highs as shutdown worries loom
November 17, 2020
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November 19, 2020

Stocks mostly lower as tug of war continues between vaccine optimism and rising COVID-19 cases

Pfizer says final analysis shows COVID vaccine 95% effective

Stocks erased gains to trade lower Wednesday afternoon, as investors struggled to restart a rally in the face of a surge in COVID-19 cases after another positive vaccine development.

What are major benchmarks doing?

The Dow Jones Industrial Average DJIA, -1.04% fell 120 points, or 0.4%, to 29,657, while the S&P 500 SPX, -1.00% was off 16 points, or 0.5%, at 3,593. The Nasdaq Composite COMP, -0.73% shed 24 points, or 0.2%, at 11,874. All three indexes were trading positive in early action.

The Dow on Tuesday fell 167.09 points, or 0.6%, to close at 29,783.75, while the S&P 500 declined 17.38 points, or 0.5%, to finish at 3,609.53 — a day after both gauges posted record finishes. The Nasdaq Composite ended 24.79 points lower at 11,899.34, down 0.2%.

The small-cap Russell 2000 RUT, -0.63% continued to outperform, rising 6.57 points, or 0.4%, to a record 1,791.91.

What’s driving the market?

Analysts said enthusiasm around progress on the COVID-19 vaccine front was tamped down by the logistical challenges of getting millions inoculated.

Pfizer Inc. PFE, 0.75% said on Wednesday that the vaccine candidate it has developed with BioNTech SE BNTX, 4.10% was 95% effective in a final analysis of clinical trial data. Pfizer plans to seek authorization for the vaccine within days, the companies said.

“The news out of Pfizer was good,” said Peter Cardillo, chief market economist, Spartan Capital. “But the reality of the positive news is being scrutinized in the sense that we are still maybe three to four months away before a vaccine is attainable. And then it’s a question of distribution.

“I don’t want to sound like it isn’t positive, but investors are rethinking being overly optimistic,” he said.

Pfizer shares were up 1.5%, while BioNTech’s were up 3.6%.

The U.S. recorded 159,431 new cases of COVID-19 Tuesday, and at least 1,583 people died, according to a New York Times tracker. In the past week, the U.S. averaged 158,254 cases a day, up 79% from the average two weeks ago, with cases rising in 50 states and territories, straining hospitals and health care resources.

In a major setback for New York City’s recovery, officials said Wednesday that its school system, the nation’s largest, would close to help limit the spreading virus.

“Things are going to get worse before they get better,” John Carey, director of equity income U.S., at Amundi Pioneer, told MarketWatch. “We’re also looking at colder weather and limited holiday activities. Investors are thinking about how much of a damper this puts on the size of gatherings and spending over Thanksgiving, Christmas and the New Year holiday.”

Until Tuesday, optimism over a vaccine had tended to overshadow worries over the continued rise in cases. Two vaccine candidates have so far proved more than 90% effective in preventing COVID-19 infections in late-stage trials.

But there also has been no sign of movement toward additional pandemic aid from Washington. Federal Reserve Chairman Jerome Powell on Tuesday made a fresh appeal to Congress to pass another coronavirus relief package to help troubled businesses and out-of-work Americans.

Powell said he expected the economic recovery to continue “at a solid pace” but faced significant downside risks despite progress toward vaccines and treatments.

New York Fed president John Williams said Wednesday that he was more optimistic about the longer-run U.S. economic outlook than he was only two months ago.

In economic news, builders broke ground on more new homes in October, the government said. Housing starts ran at a 1.545 million annual rate, beating the MarketWatch consensus.

Which companies are in focus?
How are other assets trading?

The yield on the 10-year Treasury note TMUBMUSD10Y, 0.874% was flat at 0.87%. Yields and prices move in opposite directions.

The ICE U.S. Dollar Index DXY, -0.04%,  a gauge of the greenback’s strength against its major rivals, was 0.1% lower.

The pan-European Stoxx 600 index SXXP, +0.44% closed 0.4% higher, while the U.K.’s FTSE 100 index UKX, +0.31% advanced 0.3%

Crude-oil futures rose on vaccine optimism, with the U.S. benchmark CLZ20, 0.75%  up 0.9% or 38 cents to $41.80 a barrel. Meanwhile, gold futures GCZ20, -0.85% settled down $11.20 at $1,873.90 an ounce, booking a second session in a row of losses.

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William Watts contributed reporting