U.S. stocks closed lower wednesday in the early hours of Thursday, with the Dow and the Standard and Poor’s 500 index falling for the second day in a row after technology hit new highs. Despite the good news of vaccine research and development, the worsening situation in the United States has led to the introduction of new anti-epidemic restrictions. BofA said the vaccine news sent U.S. stocks into an “extreme bull market” and the time had come to short U.S. stocks.
The Dow closed down 344.93 points, or 1.16 per cent, at 29,438.42, the Nasdaq was down 97.74 points, or 0.82 per cent, at 11,801.60 and the Standard and Poor’s 500 index was down 41.74 points, or 1.16 per cent, at 3,567.79.
Dow component Boeing closed down 3.2 percent. The Federal Aviation Administration (FAA) lifted a no-fly ban on Boeing’s 737 Max. The plane has been grounded for 20 months after two fatal crashes.
Retailer Target reported better-than-expected third-quarter earnings as its e-sales business boomed.
Home improvement retailer Lowe’s (LOW) closed down 8.2 per cent after reporting third-quarter results and posting slightly lower-than-expected earnings guidance.
Several retailers reported quarterly results on Wednesday. Chipmakers Nweida and Copa Holdings and L Brands will report results after Wednesday’s trading.
U.S. stocks have been strong in recent days, with both the Dow and the Standard and Poor’s 500 index closing at record highs on Monday, helped by positive news that two U.S. drugmakers have announced the success of the coronavirus vaccine. Investors tend to abandon high-growth technology stocks and move on to cyclical and value stocks.
So far in November, the Dow Jones Industrial Average has risen more than 12 per cent, while the S.P. 500 has gained more than 10 per cent and the Nasdaq Composite has risen more than 9 per cent.
Charlie Ripley, senior investment strategist at Allianz Investment Management, said in a note: “Most parts of the overall economy are recovering faster than many expected, as consumer spending has remained good throughout the crisis. This is reflected in consumer spending habits, which have led consumers to shift spending from service-oriented to commodity-oriented products. “
He added: “While this is good for the economy as a whole, it has resulted in an uneven economic recovery as some sectors of the economy continue to be extremely depressed.” “
The situation of the epidemic is still touching. According to the latest data from Johns Hopkins University, the average number of new confirmed coronavirus infections in the United States over the past seven days has exceeded 150,000. On Tuesday, the number of new confirmed cases in the United States reached 157,000. The surge in infections was accompanied by lower-than-expected U.S. retail sales in October as millions of Americans lost their jobless benefits.
The worsening of the outbreak has led to new restrictions in many parts of the United States. New York City announced Wednesday that all of the city’s schools will be closed in response to a surge in new cases of coronary pneumonia.
BofA said the time had come for the stock market to short U.S. stocks because of the vaccine’s proximity to an “extreme bull market.”
Fund managers are most optimistic about the market so far this year, following news of progress in vaccine research and development at several companies. Bank of America strategists have therefore called for the sale of risky assets to begin.
The Bank of America survey showed that news of advances in the development of coronavirus vaccines has sparked strong interest in global stock markets, and the mood is very positive. But as the S. and P. 500 hit record highs, fund managers now need to consider whether they should see the better or continue to invest and wait for more returns.
“The fourth quarter will continue to move around the sector that has restarted the economy, but we think it’s close to a ‘full bull market’ and in the coming weeks and months we’re advocating a ‘sell the vaccine theme,'” Michael Hartnett, BofA’s chief investment strategist, said in a note Tuesday. He added that as investor optimism about the stock market ballooned, “the process of reaching the top will start”.
BofA said the time had come for the stock market to short US stocks because of the proximity of the vaccine to an “extreme bull market”.
Meanwhile, Mark Haefele, chief investment officer at UBS Global Wealth Management, said yield-seeking investors should focus on debt in Asia and emerging countries next year, while US equities would lag behind global equities in equities next year.
Pfizer’s latest clinical numbers say the vaccine is 95 percent effective and will seek authorization for emergency use
Final data analysis of coronavirus clinical trials developed by Pfizer in cooperation with German biotech company BioNTech showed that even for older subjects, the vaccine was 95 percent effective at preventing coronavirus infection and had no serious safety risks, according to the latest data released Wednesday.
Pfizer and BioNTech also said in a statement: “To date, the data monitoring committee for this study has not reported any serious safety risks related to the vaccine.” The study found that older inoculators had fewer adverse events and fewer symptoms. “
Pfizer will be authorized by the FDA to use the vaccine for emergency use (EUA) within days. In addition, the data will be submitted to other regulators around the world and plans to publish it in peer-reviewed scientific journals.
The European Medicines Agency (EMA) said on Wednesday it had received data from Pfizer and BioNTech on large-scale clinical trials of the coronavirus vaccine, but had not yet applied for authorization.
On Monday, U.S. vaccine maker Moderna also released data from its Phase III clinical study, showing that its Messenger RNA coronavirus vaccine is 94.5 percent effective.
Federal Reserve Chairman Colin Powell stressed short-term uncertainty
Federal Reserve Chairman Colin Powell said Tuesday that progress on vaccine trials is certainly good news, especially in the medium term, but in the short term, major challenges and uncertainties remain. Even in the best case scenario, he says, it will take months for widespread vaccination to become a reality.
It was also Powell’s first comment on the progress of recent U.S. vaccine trials. With the U.S. epidemic still spreading rapidly, he said, the next few months could be challenging: “We’re going to have a long, hard time ahead.” “
The spread of the coronavirus outbreak remains a short-term risk to the Fed. “The Fed will stay here and be strongly committed to using all our tools” to support the economy, Powell said at a video event on Tuesday. “
Economists warn that there is a time lag between vaccination and recovery, and that the U.S. economy could take months to benefit from the coronavirus vaccine, as the U.S. faces an unprecedented surge in coronavirus cases.
The FAA lifted the ban on Boeing’s 737 Max flights
The U.S. Federal Aviation Administration (FAA) ruled Wednesday that the Boeing 737 Max can safely resume flights after two deadly crashes grounded the aircraft for 20 months.
The FAA announced the decision Wednesday on its website, marking the end of the longest suspension in U.S. history and laying the groundwork for airlines and other regulators around the world to resume flying the aircraft.
The FAA called for fixing safety systems that lost control in two crashes and several other defects found in months of review, and for new pilot training for Boeing’s 737 Max models, focusing on problems that occurred in the accident.
Boeing closed down 3.2 percent, highlighting morning gains. The Federal Aviation Administration has approved the return of the Boeing 737Max.
Pfizer and Bionteck said their candidate coronavirus vaccine showed 95 percent effectiveness in the final efficacy analysis of the third phase of the trial.
Tesla closed more than 10 per cent higher. The company received its first rating increase in more than three years to over-match, with a target price of $540.
Copa Holdings, American Airlines Group, United Airlines, Delta Air Canada, Southwest Airlines and other U.S. aviation stocks rose.
Apple’s new “commission” policy for small businesses and independent developers: Developers earning less than $1 million a year in the App Store (after commissions) will see their commissions cut by 15%, down by half from the previous 30%. The program will be officially launched on January 1, 2021.
European stocks closed higher on Wednesday, with Germany’s DAX up 0.5 per cent, Britain’s FTSE 100 up 0.3 per cent, France’s CAC 40 up 0.52 per cent and Europe’s Stopp 50 up 0.37 per cent.
Gold futures closed lower on Wednesday. The latest news on coronavirus vaccine therapy and preventive vaccines has put pressure on gold futures, which are the target of safe-haven investments.
Lukman Otunuga, senior research analyst at FXTM, said: “Optimistic expectations about the latest developments in vaccine development support risk appetite and ultimately put risk aversion assets under pressure. “
Early Wednesday, Pfizer (PFE) announced that its co-developed coronavirus vaccine with BioNTech was 95 percent effective in the final analysis of clinical trials, a more optimistic result than the preliminary results previously reported.
Gold futures for December delivery fell $11.20, or 0.6 percent, to $1,873.90 an ounce on the New York Mercantile Exchange.
Silver futures for December delivery fell 20 cents, or 0.8 percent, to $24.448 an ounce.
Crude oil futures closed higher on Wednesday. The latest upbeat news on vaccine research has boosted investor confidence in improved economic and energy demand, supporting crude oil prices
U.S. crude oil supplies rose for the second week in a row, according to the U.S. Energy Information Administration.
West Texas Central crude for December delivery rose 39 cents, or 0.9 percent, to close at $41.82 a barrel on the New York Mercantile Exchange. That’s the highest closing price for a contract in recent months since September 1, according to FactSet.