Stock Market Update: Monday, Nov. 9, 2020
Wall Street tapped fresh all-time highs after Pfizer and partner BioNTech announced their vaccine candidate is over 90% effective in preventing coronavirus in data released from their still-ongoing Phase 3 trial — and more in Monday’s stock market update.
Pfizer Inc. (NYSE: PFE) and BioNTech (Nasdaq: BNTX) are continuing to accumulate safety data and estimate two more months of safety data testing following the second and final dose of the vaccine candidate. Additionally, the amount of safety data specified by the FDA in its guidance for potential Emergency Use Authorization will be available by the third week of November, the companies noted.
Although the stock market closed off its highs and Tech closed lower, the breakout was a bullish signal as volatility fell to a multi-month low.
Stock Market Update
The Russell 2000 skyrocketed 3.7% while testing an opening peak of 1,745.
The Dow zoomed 3% following the morning trip to 29,933.
The S&P 500 jumped 1.2%, after trading to an opening high of 3,645.
The Nasdaq fell 1.5% despite hitting a morning high of 12,108.
Energy was the strongest sector after skyrocketing 14.3% while Financials soared 8.3%. Communication Services and Technology paced sector laggards after falling 0.9% and 0.7%, respectively.
Stock Market Movers
Beyond Meat Inc. (Nasdaq: BYND) cratered 27% after hours following an earnings miss. It was expected to report a profit of five cents a share on revenue of $132.8 million. The high estimates are at 14 cents a share on sales of $149.7 million with the low forecasts calling for a loss of six cents a share on revenue just under $116 million. Instead, Beyond Reported a loss of 28 cents per share and revenue of $94.4 million.
The company matched estimates last quarter after reporting a loss of two cents a share. Last month, shares were downgraded by one Wall Street firm with a price target of $136. The analyst said new developments were incrementally positive and the stock’s longer-term outlook remained solid. However, it was also noted the stock’s valuation is stretched at 20-times enterprise value to the next 12 months in sales. Moreover, the analyst believes a fair multiple is in the 8 to 10-times range.
Stock Market Outlook
With the presidential election called by the media networks for former Vice President Joe Biden, the market appears to have some near-term uncertainty removed. Although President Donald Trump has vowed to fight the results with court orders, it may be a tough case to prove with many obstacles. How the legal process shakes out remains to be seen but the near-term action could continue to be bullish.
The technical signal to watch this week will be volatility. The VIX tested intraday lows of 24.14 and 24.03 in back-to-back sessions around mid-October while closing at 25.07 and 25. Friday’s low was at 24.56 and today’s low tapped 22.41.
Continued closes below 25-24 would be a very bullish signal for continued stock market momentum. The 50-day moving average is at 28.69 and also appears to be leveling out from its recent uptrend. This is a slightly bullish signal with stock market nervousness likely returning when the VIX clears and recovers the 28-30 area.
Global Economy
European markets closed higher as news of a Biden victory in the election raised hopes of better trade ties between Washington and Europe.
France’s CAC 40 rallied 7.6% and the Belgium20 added 6.4%. Germany’s DAX 30 rose 4.9% and UK’s FTSE 100 jumped 4.7%. The Stoxx 600 advanced 4%.
Asian markets showed strength despite news China officials are mulling the scaling back of stimulus.
Japan’s Nikkei rose 2.1% and Australia’s S&P/ASX 200 was up 1.8%. China’s Shanghai soared 1.9% and South Korea’s Kospi was higher by 1.3%. Hong Kong’s Hang Seng gained 1.2%.
U.S. Economy
There were no major economic reports on Monday.
Stock Market Sentiment
The iShares 20+ Year Treasury Bond ETF (Nasdaq: TLT) was down for the second straight session after tagging a fresh multi-month low of $154.62. Prior and upper support from early June at $155-$154.50 was breached but held. A close below the latter would signal additional weakness towards $154-$153.50.
Lowered resistance at $156.50-$157.
Volatility Index
The iPath S&P Vix Short-Term Futures (NYSEArca: VIX) extended its losing streak to six straight sessions with the morning low reaching 22.41. Prior and upper support from late August at 22.50-22 was breached but held. A close below the latter would indicate a retest towards 20.50-20.
Lowered resistance is at 26-26.50 followed by 27-27.50.
Stock Market Analysis
The SPDR Small-Cap 600 ETF (NYSE: SLY) was up for the second time in three sessions after testing an intraday high of $71.41. Longer-term and lower resistance from last December at $71-$71.50 was cleared but held. A close above the latter would be an ongoing bullish signal with additional momentum towards $72.50-$73.
Fresh support is at $69-$68.50 followed by $67-$66.50.
RSI (relative strength indicator) is back in an uptrend with lower resistance at 65-70 getting recovered. A move above the latter would signal additional strength towards 75 and the June peak. Support is at 60-55.
Sector
The Energy Select Sector SPDR Fund (NYSEArca: XLE) made a strong move to clear its 50-day moving average with the intraday high hitting $33.79. Prior and lower resistance from mid-September at $33.50-$34 was cleared but held. A close above the latter would suggest additional strength towards $35.50-$36 and the 200-day moving average.
Current support is now at $32.50-$32. A close below the latter would likely signal a retest towards $31.50-$31.
RSI is in a strong uptrend with lower resistance at 65-70 holding. A close above the latter would signal strength towards 75 and the June top. Support is at 60.
Check back after the closing bell for the most important news and numbers in the WealthPress stock market update.