Stocks Slide as Rising Coronavirus Cases Overwhelm Positive Developments

Friday, November 20, 2020 4:53 PM | Nick Dey

Stocks fell as a whole this week as rising coronavirus cases, new lockdowns and drama between policymakers in Washington outweighed positive vaccine news.

Fast Start

Markets hit the ground running on Monday and looked poised for a robust week of trading. Leading the news for the day, and likely the week, was Moderna’s (MRNA) announcement that it's vaccine has shown an efficacy rate of 94.5%.

While Moderna’s announcement was welcomed by investors, futures were already trading high, signaling that market was either expecting the news or was just in the mood to go higher anyway.

The best part about Moderna's announcement is the conditions needed to store this vaccine. Unlike Pfizer's (PFE) vaccine, Moderna said its vaccine has a longer shelf life at more standard refrigerator temperatures than previously expected. This is vital to the long-term impact of the vaccine as there will be fewer challenges in getting it distributed.

Like other vaccine news, Moderna’s announcement Monday drove a lot of technology and stay-home related stocks down, while airlines and other open-economy stocks soared. To put the effect of this in perspective, Airlines rose 10.46% this week as a whole, while biotech fell 1.61%.

Mid-week Lull

Over the next two days, the rally cooled off and markets dipped. Driving markets lower were rising Covid cases, new lock-downs, and the absence of any immediately positive news capable of distracting investors from the coronavirus numbers. There was some notable news for individual stocks, including Tesla (TSLA) which jumped more than 20% after it was announced that the company would, at last, be included in the S&P 500.

Retail Sales released Tuesday for the month of October were underwhelming, increasing just 0.3% after a 1.6% increase in September. Meanwhile, Wednesday's housing starts provided a glimpse of normalcy as they returned just below their pre-pandemic levels at 1.53 million units.

Despite that glimmer of optimism, and some strong earnings releases, which did what they could to get unmotivated markets back on track Wednesday, selling picked up after New York City Mayor Bill de Blasio said the city's public schools will temporarily close as a result of surging covid cases.

Stocks got back on track Thursday, despite having a slow start to the day. A worse-than-expected reading on initial unemployment claims at 742,000 claims got things off to a slow stasrt, but, stocks got a bump after Senate Minority Leader Chuck Schumer  said  Majority Leader Mitch McConnell agreed to restart much-needed economic stimulus negotiatians.

This brings us to Friday, which saw all indices fall following drama between the two biggest economic policy makers U.S., Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin. Mnuchin requested that the Fed return stimulus funds that backstop Federal Reserve lending programs. The Fed responded almost immediately, that “the full suite” of measures should be maintained into next year.

All said, the S&P 500 fell 0.77%, while the Dow dropped 0.73%, and the tech-heavy Nasdaq rose 0.22%.

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