November 10, 2020

Few things are as encouraging as a glimpse at the light at the end of the tunnel. Pharmaceutical makers Pfizer and BioNTech announced Monday morning that their coronavirus vaccine has shown strong results through ongoing drug trials – a 90% efficacy rate with minimal side effects. This news immediately gave lift to the markets, adding another historic moment to a year chock-full of them.

Already buoyed from the weekend announcement of former Vice President Joe Biden’s 2020 presidential election win, the broad-based S&P 500 and Dow Jones Industrial Average indices recorded massive gains within the first five minutes of trading Monday morning and then gradually toned down the leap through the day. The S&P 500 closed at 3,550.50 points, up 41.06 points, a 1.17% gain. The Dow saw stronger results closing at 29,157.97, up 834.57 points, a 2.95% gain.

Both indices topped their all-time intraday highs, a particularly remarkable turn of events less than eight months after the precipitous fall that bottomed out March 20. Showing hope for the broader economy, stocks most damaged by the pandemic, such as smaller companies and areas like hospitality, saw the most benefit from the rally. Notably, the NASDAQ Composite, which has recorded the technology sector’s singular strength through the pandemic, saw early day gains that declined through the afternoon, closing down by 1.53%.

Monday also marked the first day of trading after it became clear Joe Biden would become the next president of the United States. Ongoing legal challenges do not seem likely to reverse the outcome. The markets made steady gains last week – the strongest during a presidential election week on record – and on the clarity of the decision are continuing to push higher. We now look to the U.S. Senate, where two Georgia seats will be decided in a runoff election to determine the majority in Congress’ upper chamber. The possibility of split governance in the case of a Republican win may be easing some concerns about rapid change under single-party rule.

Despite the electoral clarity and promising vaccine news, our hopes are tinged with continuing challenges and uncertainties. The U.S. is struggling with its highest rates of COVID-19 infections and deaths to date, and while encouraging, the vaccine development is not a guarantee. There are also questions about how fast the vaccine can be produced, how thoroughly it can be distributed and the public’s confidence in the drug. We expect volatility to remain a constant companion for a while longer.

Nonetheless, this is a positive step toward an eventual return to normalcy.

 

Sincerely,

The Gratz Park Private Wealth Team

 

 

Investing involves risk, and investors may incur a profit or a loss. All expressions of opinion reflect the judgment of the authors and are subject to change. There is no assurance the trends mentioned will continue or that the forecasts discussed will be realized. Past performance may not be indicative of future results. Economic and market conditions are subject to change. The S&P 500 is an unmanaged index of 500 widely held stocks. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The NASDAQ composite is an unmanaged index of securities traded on the NASDAQ system. An investment cannot be made in this index. Sector investments are companies engaged in business related to a specific sector. They are subject to fierce competition and their products and services may be subject to rapid obsolescence. There are additional risks associated with investing in an individual sector, including limited diversification.
Material prepared by Raymond James for use by its advisors.
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