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Market Gains as Investors Hopeful for Vaccine

Weekly Update – December 04, 2020

  • The S&P 500 index rose 2.2% last week, setting fresh record highs amid optimism for COVID-19 vaccines to help contain the spreading pandemic.
  • The market benchmark ended the week at 3,699.12, up from last Friday’s closing level of 3,638.35 and marking a new record closing high. The index also reached a new intraday high Friday at 3,699.20.
  • The energy sector posted the largest weekly percentage gain, up 10.5%, followed by advances of 2.6% in health care, 2.1% technology, and a 2.4% rise in communication services. Only one sector fell on the week: Utilities shed 0.7%.
  • The gains came even as COVID-19 case counts, hospitalizations and deaths continued to reach new heights in the US. The global death toll from COVID-19 is now above 1.5 million.
  • However, investors are hopeful the pandemic will be brought under control with the release of COVID-19 vaccines. The UK granted emergency-use authorization Wednesday for Pfizer (PFE) and German partner BioNTech’s (BNTX) vaccine, and the market is anxiously anticipating a similar approval soon by the US Food & Drug Administration.
  • Friday, the Labor Department reported weaker-than-expected job growth for November. Non-farm payrolls rose by 245,000 last month, the Bureau of Labor Statistics said, well under the Econoday consensus estimate of 500,000. Still, the unemployment rate slipped 0.2 percentage point from October to 6.7%, better than the Street’s view for 6.8%, and investors are hopeful the slow jobs growth may become good impetus for more stimulus efforts.
  • The energy sector’s climb came as crude oil futures rose. Among the gainers, Chevron (CVX) shares added 2.2% this week while Exxon Mobil (XOM) rose 3.7%.
  • In health care, Pfizer shares gained 8.4% amid the news that the UK regulator has granted it and BioNTech’s (BNTX) COVID-19 vaccine candidate a temporary authorization for emergency use in the country, the first such approval in the world. It was followed by a Friday approval in Bahrain for an emergency use authorization there of the COVID-19 vaccine candidate.
  • In the technology sector, shares of Micron Technology (MU) jumped 14% as the computer memory and data storage company boosted its revenue, gross margin and earnings per share guidance for its fiscal Q1 ended Dec. 3. Shares of other chip makers were also strong, with Intel (INTC) climbing 9.6%.
  • On the downside, in utilities, shares of PPL (PPL) fell 1.7% as BofA Securities downgraded its investment rating on the stock to neutral from buy.
  • Next week, the economic data calendar includes the release of October consumer credit figures Monday, Q3 productivity and unit labor costs Tuesday, and October wholesale inventories Wednesday. November consumer prices are due Thursday, followed by November producer prices Friday. The first reading on December consumer sentiment is also on the docket for Friday.

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