Nov. 9, 2020 - This week is off to an exciting start, both in the the market and in the battle against the coronavirus.
Pfizer (PFE) and partner BioNtex (BNTX) announced this morning that their vaccine candidate has shown itself to be 90% effective at preventing COVID-19 so far in a phase three study. The study, which has 45,538 participants, has had 94 cases of coronavirus so far, will continue until it reaches 164 confirmed cases. The companies say the safety data needed to apply for an emergency-use authorization from the FDA will be available in the third week of November.
The companies said they expect to be able to make about 50 million doses of the vaccine by the end of 2020 and 1.3 billion during 2021. The vaccine takes two doses to be effective, so the number of people who can be treated is half of the number of doses. So while this news is a reminder that there is a light at the end of the tunnel, we still have quite a bit of tunnel left to go.
These study results also seem promising for a vaccine candidate being developed by Moderna (MRNA), which uses a similar technology.
Of course, there are many more winners from a successful vaccine than just the makers of the vaccines. Stocks rallied pretty much across the board Monday, although there was some weakness in the stocks that have been the strongest since the spring sell off. Big tech and major online retail players fell, while banks, travel stocks and energy all rallied.
This sets up an interesting dynamic going forward. As mentioned above, there's a long way to go before enough people are vaccinated for things to return to normal, or whatever the post-coronavirus "normal" looks like. So we're likely in for a number of news cycles about both positive new developments, and potentially production delays. Also, the United States and Europe are also in the midst of an alarming rise in cases. As the weather gets colder, the situation is likely to worsen. This has already lead to new lockdowns in parts of Europe and the same could happen in the U.S. Even if new lockdowns aren't imposed by the government, we saw over the summer that consumers will stay home when they feel like venturing out is too dangerous, which ends up having much of the same effect.
So we're potentially set up for more days like to today where the "reopen trade" wins, mixed in with days where the virus news is less good and the big-tech and other "stay-at-home" stocks lead the market.
This should provide some hope for value investors, and others who have held on to investments in the unloved parts of the market. Short-term investors may get some opportunities to trade these rotations. This seems like the kind of market where a diverse portfolio will hold up well. It's hard to predict the news, so sometimes the easiest way to navigate this kind of market is to be smartly positioned with a portfolio that can gain in either kind of market.
Economic Events this WeekTuesday
- 10:00 a.m. - JOLTS - Job Openings
- 10:30 a.m. - EIA Crude Oil Inventories
- 8:30 a.m. - Consumer Price Index
- 8:30 a.m. - Initial Claims
- 8:30 a.m. - Producer Price Index