Market Recap
US Markets:
Stocks came back down to earth today officially ending the furious post-election rally and euphoric vaccine rally. Investors confronted the very real reality that the virus is still here and surging to record numbers all across the world. The indices turned sharply downwards after Federal Reserve Chairman Jerome Powell said the U.S. economic outlook remained uncertain even after this week’s positive vaccine news. On Wednesday alone, over 144,000 infections were confirmed in the U.S.-a record. Over 10 million Americans have now been infected. As cities reimpose shutdowns, there are very real fears that the economic recovery to this point could be derailed. Chicago just issued a stay-at-home advisory today while New York imposed a new curfew on restaurants, bars, and gyms.
The Dow Jones dropped 317.46 points, or 1.1%, and fell by as much as 495 points earlier in the session. The S&P 500 also slid 1.0%, and left the index just 0.8% above its Friday closing level. This gives back most of its vaccine rally gains. The Nasdaq dropped 0.7% as well.
Cryptocurrency:
This was a very big day for Bitcoin, as the cryptocurrency broke a major technical hurdle for the first time since January 8, 2018. Bitcoin finally crossed the $16,000 level. Validation from public companies and major investors has been driving the surge. PayPal recently decided to allow its US customers to buy, sell and hold cryptocurrencies in their PayPal wallets, and the Iranian government announced that it was adopting Bitcoin for international trade. Bitcoin was also further boosted after Cynthia Lummis, a bitcoin holder, won the US senate seat in Wyoming. Many are expecting this surge in Bitcoin to reach $20,000 sooner rather than later, and believe that the cryptocurrency could consolidate before December.
Overall Market:
Although the UK’s GDP grew by a record 15.5% during Q3 2020, European equity markets cooled off after a 3 day rally. Poor economic data showed that the Eurozone industrial output unexpectedly declined in September. Investors are also coming back to reality after the vaccine euphoria earlier in the week. COVID-19 cases are surging to record levels and are negatively impacting Europe’s recovery. Infections in Italy crossed the 1 million mark on Wednesday, and there are worries the medical system could collapse once again. Over half of the country’s hospital beds were occupied by Covid-19 patients. This is above the 40% warning threshold set by the Italian Health Ministry. Additionally, the coronavirus death toll in the UK and Spain surpassed 50,000 and 40,000, respectively. The DAX 30 dropped 1.1% to 13,070, the FTSE 100 dropped 0.5% to 6,349, the CAC 40 slid 1.3% to 5,374, the FTSE MIB declined 0.6% to 20,863, and the IBEX 35 dropped 0.8% to 7,732.
US weekly jobless claims fell more than expected, with jobless claims declining to 709,000 in the week ended November 7th, from the previous week’s level of 757,000. This beat market estimates of 735,000 jobless claims. This is the lowest number since late March. Additionally, the annual inflation rate in the US fell to 1.2% in October from 1.4% in September. This is slightly below the market consensus of 1.3%, and is well below February’s 2.3% rate before the coronavirus hit. Oil was little changed today, and Aluminum reached its highest level since 2019.
WHATS UP
Travel and bank stocks were among the biggest laggards today after surging earlier in the week. United Airlines fell more than 4%, while Carnival dropped 7.9%. JPMorgan Chase, Citigroup and Wells Fargo were all down more than 1% as well.
Many analysts and reporters believe that the post-election rally and vaccine rally were overly-euphoric. The election is still contested, COVID is raging out of control, and there is still no economic stimulus in sight. But be ready, because more positive vaccine data could be on the horizon. Moderna just announced that its phase-three trial had accrued enough cases of COVID to submit the preliminary results to an independent safety monitoring board.
Source: CNBC, TradingEconomics, Yahoo! Finance
