Stocks Finish Best Week Since April
November 9 2020 - Team Stockal
All eyes were on the U.S. Presidential elections as Joe Biden beat Donald Trump in a closely fought election. Traders pressed for further gains as the markets registered the best week in several months. The rising coronavirus cases – four consecutive days of new highs – is increasingly concerning the country. President-elect Biden is expected to announce new steps to address this challenge.
Top Stories This Week
Biden promises change after winning U.S. elections
Joe Biden was finally declared the winner in a tight contest to elect the next U.S. President. Biden won 290 electoral college votes to seal the win. His agenda includes tax hikes on wealthy companies and climate-friendly energy policies. Biden reached the 270 vote requirement after winning the key states of Michigan, Pennsylvania and Wisconsin, referred to as Blue Wall that helped Trump win in 2016. Donald Trump refused to accept defeat, knocking the doors of the courts against the results in some closely contested states. Biden is expected to unveil a new plan to address the coronavirus pandemic and has proposed a $3.5 trillion stimulus to create jobs, which could face opposition in a Republican-led Senate.
The Federal Reserve has promised whatever it takes to keep the economy from slowing. It should stand by President-elect Biden for the stimulus package in good stead. Since 2000, every time S&P 500 was higher as Americans exercised their franchise, November and December ended with gains. Since 1986, every first term of the Presidential office has been positive too.
U.S. reports record high Coronavirus cases, Pfizer Vaccine Trials Proves 90% Effective
With four consecutive days of a record number of cases, the spread of coronavirus across the U.S. is getting worse. The average number of cases over the last seven days was 103,000, seeing a sharp 30 percent spike over a week. 19 states reported a record-high number of hospitalised people, based on a seven-day average.
The average number of people hospitalised has gone up five percent in 38 states, CNBC reported. With 126,742 new cases on Saturday and another 126,480 on Friday, the spike is causing some local officials to introduce restrictions. Connecticut, Massachusetts, Illinois, and Chicago are among those States which are seeing these restrictions. The restrictions could hit business activity.
Meanwhile, Pfizer recently reached a huge milestone in the race to build the first coronavirus vaccine. The company’s vaccine made in partnership with BioNTech, has been tested successfully in 90% of the 94 subjects who were infected with at least one symptom. Pfizer remains on track to provide at least 2 months of safety information in the 3rd week of November, as required by the U.S. Food and Drug Administration, and could file for an emergency authorization soon after this 2-month period.
With the surge in cases, Pfizer’s positive news has sparked hopes for an early coronavirus vaccine. More than 50 million people have been infected worldwide and 237,000 U.S. citizens have died since the outbreak. BioNTech (BNTX) shares have soared 171.6% year to date through Friday while Pfizer’s (PFI) stock has jumped 11.5% in premarket trading on Monday.
Street registers smart rally through election uncertainty
Traders took smart bets on Wall Street driving the indices to its biggest weekly gain since April. The bulls held centrestage for four consecutive days before giving up some gains as the Dow ended with 1821.8 points, or a 6.87 percent gain for the week. The weekly gain for S&P 500 was even more with 239.48 points or 7.32 percent, the best since election week in 1932. The 1000-plus point gain for Nasdaq 100 was led by tech majors. Markets received a positive surprise with a strong job report. The Labor Department said unemployment rate fell to 6.9 percent in October against 7.9 percent in September, adding 638,000 jobs.
While the election week rally has been strong, it will need earnings growth and fresh legs to continue the momentum. The rising numbers for new coronavirus cases could hit consumption and in turn, the economy.
AIG to sell 20% in subsidiary as rising claims bite
American International Group (AIG) is looking to shed up to 20 percent of equity in its life and retirement business. The sale could be made through an IPO or a private placement over the next year. AIG President Peter Zaffino, who will take over as CEO in March 2021, said that the money will be used to reduce the debt of the company. While its adjusted EPS of 81 cents beat estimates, the losses related to storms, wildfires and coronavirus have hit the stock causing third quarter profit to slump. Its pre-tax profit in the general insurance business declined by 18%, but rose 51% in the life and retirement unit. The stock has lost nearly 20 percent from its high during 2020.
Insurance companies are facing rough weather with a sharp increase in the payouts against natural catastrophes. The increased pressure on claims has come at a time when they have had to honour payments against coronavirus-induced losses. The investments that insurers rely on to pay claims have also come under pressure.
Cannabis stocks on fire legalisation spreads
More states in the U.S. are legalising the use of marijuana that has caused the stocks to be on fire. Aurora Cannabis (ACB) doubled through the week while Tilray (TLRY) and Canopy Growth (CGC) followed with gains too. Five states – including Arizona, New Jersey, South Dakota, Montana and Mississippi – legalised some form of marijuana use. Oregon became the first state where voters decided that the possession of small amounts of drugs will not be punishable by jail time. Since the first states decided to legalise marijuana use, at least 15 states and two territories allow its recreational form. Another 34 states and two territories allow marijuana for medical use.
The National Organisation for the Reform of Marijuana Laws (NORML) has been pushing for ending the prohibition on marijuana since 1970. Recreational cannabis was illegal across 50 states about 10 years ago. Colorado and Washington were the first states to liberalise these impositions in 2012.U