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Nov 19, 2020

Wall Street Closing Report: Stocks rise as Wall Street turns to tech for safety amid increasing Covid-19 cases

 

Fred Imbert, Jesse Pound


Stocks traded slightly higher on Thursday as traders increased their exposure to major tech names amid a rising number of coronavirus cases.

The Dow Jones Industrial Average traded 85 points higher, or 0.3%. Earlier in the day, the Dow was down more than 200 points. The S&P 500 gained 0.5% and the Nasdaq Composite advanced 0.9%.

Netflix and Amazon advanced 1% and 0.4%, respectively. Alphabet climbed 1% and Microsoft traded higher by 0.8%. Apple rose 0.4% along with Facebook.

Stocks also got a boost after Senate Minority Leader Chuck Schumer, D-NY, said Majority Leader Mitch McConnell, R-KY, had agreed to resume negotiations on new fiscal stimulus.

A CNBC analysis of Johns Hopkins University data found that the seven-day average of daily new U.S. coronavirus infections is now at 161,165, up 26% from last week. In total, more than 11.5 million coronavirus cases have been confirmed in the U.S.

“While we wait for clarity on a vaccine and additional fiscal stimulus, investors are really struggling to interpret the near-term impacts” of surging coronavirus cases, said Michael Arone, chief investment strategist at State Street Global Advisors. “What’s also been clear is technology stocks have become investors’ security blanket. When anxiety rises, they go back to the reliable growth of technology.”

The recent uptick in Covid-19 cases has prompted some parts of the country to retake stricter measures to curb the virus spread. New York City Mayor Bill de Blasio ordered schools to close for in-person learning “out of an abundance of caution.” On Thursday, the Centers for Disease Control and Prevention advised Americans against traveling for Thanksgiving due to the outbreak.

“Negative COVID headlines/increased economic lockdowns (especially in NYC and LA County) are starting to offset vaccine optimism, and that’s weighing on stocks,” wrote Tom Essaye, founder of The Sevens Report. “We are now facing the biggest number of economic restrictions since the spring, and that will weigh on economic growth and, potentially, earnings.”

Sentiment on Thursday was kept in check, however, after the release of preliminary data showed University of Oxford and AstraZeneca’s vaccine candidate triggered a similar immune response among all adults. Oxford and AstraZeneca’s data came a day after Pfizer and BioNTech said their Covid-19 vaccine candidate was 95% effective.

Stocks have ripped higher this month amid clarity following the U.S. election and the positive news on potential coronavirus vaccines. The S&P 500 has gained more than 9% in November and the small-cap Russell 2000 is up more than 15% in that time period.

“You see the market really kind of wanting to move in one direction, and then I think the vaccine news was certainly a catalyst to accelerate that a little bit. So I wouldn’t be surprised to see that trade persist for some time,” Jeff Mills, chief investment officer at Bryn Mawr Trust, said about the rotation into cyclical names.

“That being said, I do think the leadership in the market could be volatile over the next couple of months because you’re going to be battling Covid case increases and incrementally better news relative to the vaccine,” Mills continued.

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