Stocks were mixed Thursday, selling off late after
(ticker: PFE) announced cuts to the number of Covid-19 vaccine doses to be distributed this year. Many stocks held their ground because the odds of a fiscal stimulus bill passing soon are increasing, and economic data were upbeat.
Dow Jones Industrial Average
rose 85.73 points, or 0.29%, to close at 29,969.52. The
fell 2.29 points, or 0.06%, to end at 3,666.72, and the
rose 27.82 points, or 0.23%, to close at 12,377.18; both the S&P 500 and Nasdaq set intraday records Thursday before the selloff. The biggest gainer in the S&P 500 was
(RL), whose shares soared 8.7%; the upscale apparel firm’s shares remain down about 18% for the year to date.
Pfizer said it now expects 50 million doses distributed for this year, down from an initial forecast of 100 million. Importantly, the company did not lower its expected distribution of over 1 billion doses by the end of 2021. Pfizer stock fell 1.7%.
Market optimists found areas of support, however. Senator Majority Leader Mitch McConnell said the Democrats’ recent acquiescence to a bipartisan, $908 billion stimulus bill is a step in the right direction. House Speaker Nancy Pelosi said that a bill needs to get done sooner rather than later.
Initial jobless claims came in at 712,000, better than estimates of 780,000 and a steep improvement from the prior reading of 787,000. This comes amid otherwise slowing economic data of late.
The Services Purchasing Managers Index, which measures new order and employment activity in the services sector, read 58.4, better than the expected 57.7. Indeed, highly cyclical services stocks rose on the beat.
Hilton Worldwide Holdings
(CCL) saw shares rise 2.8%, 2.3% and 8.1%, respectively. The
Vanguard S&P 500 Value
ETF (VOOV) eked out a 0.2% gain.
Economic data have taken center stage as of late. Numbers are down: Services and manufacturing PMIs have slipped to below 59 this week from above 61 a few months ago, but investors are focused on fiscal stimulus. That would be a lifeline to cash-starved small businesses and low-confidence households until vaccines are distributed.
“Some sort of stimulus package before the end of the year looks like it’s gaining traction, which helps explain this latest run to new record highs by a couple major indexes,” wrote JJ Kinahan, chief market strategist at TD Ameritrade, in a blog post.
“With some rumblings of stimulus progress and positive momentum on the vaccine front, labor market watchers could be ever hopeful for a more meaningful decrease in jobless claims in the long run,” wrote Mike Loewengart, managing director of investment strategy at E*Trade, in emailed remarks to the media.
Strategists at Evercore wrote in a note that their clients think there is a “50/50” chance of a bill passing during the lame-duck session. A few weeks ago, only 20% of clients told Evercore they think a bill will pass this year. Stocks have risen in the past few weeks, with the S&P 500 up 4% since Nov. 12, which marked the end of a brief pause in a broader stock-market rally during the fourth quarter. More recently, treasury-inflation-protected securities have risen in value, signifying firming inflation expectations, partly on the back of fiscal stimulus.
Investors are also not concerned about the size of the deal and have bought stocks mostly on the mere probability of a bill soon. “There are a couple of economic realities that make us confident that a small stimulus package is more than enough to get us to the point where vaccines will become more widely distributed,” wrote RBC Capital Markets economist Tom Porcelli. Wages and salaries have returned to late February levels and rose 2% year-over-year in October.
Also, Porcelli noted that consumers are saving cash, partly a result of earlier rounds of stimulus. Consumers saved about 13% of their income in October, down from 19% in June, but above the 7% long-term average.
Write to Jacob Sonenshine at [email protected]