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It’s been a strong month for equities, but here in Christmas Week, we see stocks selling off in the Monday pre-market. News over the weekend that a new strain of Covid-19 has emerged in the south of England, causing a shutdown in the region and market fears that the new strain’s higher levels of contagion may prolong the pandemic. Though already off the lows we saw a couple hours before today’s opening bell, the Dow is down 400 points, the S&P 500 -55 and the Nasdaq -140.
There are plenty of reasons to “sell the news” today, including Tesla’s (TSLA - Free Report) momentous occasion of being added to the S&P 500 at long last. This way, ETFs and mutual funds the world over that invest in the S&P 500 platform will be buyers of Tesla, if they weren’t already. Investors had not missed this opportunity, especially because the stars looked aligned earlier in the year for Tesla to be added to the S&P, only for things to fall apart. Year to date, Tesla shares are up an incredible 700%; today’s sell-the-news trade has the electric car giant down 4%.
The new Covid-19 strain is sending many stocks in many industries down in today’s pre-market, from oil companies to Boeing (BA - Free Report) to hotels and cruise lines. Though this strain does appear to spread the disease more quickly, there is no data suggesting it is more dangerous or lethal than the initial strain we’ve all come to know and loathe. Also, it is expected that the vaccines currently given Emergency Use Approval, from Pfizer (PFE - Free Report) -BioNTech (BNTX - Free Report) and Moderna (MRNA - Free Report) , will have positive efficacy on this new strain.
That said, Covid-19 has now officially become the #1 cause of death in the U.S., with more than 3000 fatalities per day, and ICUs across the country beyond capacity, limiting the effectiveness of general healthcare. As one writer put it, this is the equivalent of more than a dozen fully loaded commercial airliners crashing per day. Vaccines are making their way into the arms of front-line healthcare workers, but it will likely be mid-2021 by the time everyone who ought to be immunized from Covid-19 will receive the vaccine. Which means we’ve still got more tragedy and pain to come.
A ray of good news this morning is that Congress will be voting today on an agreed-upon stimulus/relief bill worth $900 billion, along with $1.4 trillion in government funding. More than $160 billion of this deal will be mailed out as household checks, $120 billion will go to additional unemployment assistance and $325 billion will be allotted to small-business relief, including more than $280 billion in the previously successful Paycheck Protection Program (PPP). Businesses will also be able to deduct expenses from their PPP loans.
It’s a long time coming, but it’s here now. We hope to see certain economic metrics that have begun to twist in the wind — weekly jobless claims among the most troubling, recently — shored up soon after the monies are allocated. Perhaps the market indexes slowly building back closer to the green will provide the boost investors are looking for as we all pore over the details of this relief package.
Image: Bigstock
Pre-Markets Down to Start Christmas Week
Monday, December 21, 2020
It’s been a strong month for equities, but here in Christmas Week, we see stocks selling off in the Monday pre-market. News over the weekend that a new strain of Covid-19 has emerged in the south of England, causing a shutdown in the region and market fears that the new strain’s higher levels of contagion may prolong the pandemic. Though already off the lows we saw a couple hours before today’s opening bell, the Dow is down 400 points, the S&P 500 -55 and the Nasdaq -140.
There are plenty of reasons to “sell the news” today, including Tesla’s (TSLA - Free Report) momentous occasion of being added to the S&P 500 at long last. This way, ETFs and mutual funds the world over that invest in the S&P 500 platform will be buyers of Tesla, if they weren’t already. Investors had not missed this opportunity, especially because the stars looked aligned earlier in the year for Tesla to be added to the S&P, only for things to fall apart. Year to date, Tesla shares are up an incredible 700%; today’s sell-the-news trade has the electric car giant down 4%.
The new Covid-19 strain is sending many stocks in many industries down in today’s pre-market, from oil companies to Boeing (BA - Free Report) to hotels and cruise lines. Though this strain does appear to spread the disease more quickly, there is no data suggesting it is more dangerous or lethal than the initial strain we’ve all come to know and loathe. Also, it is expected that the vaccines currently given Emergency Use Approval, from Pfizer (PFE - Free Report) -BioNTech (BNTX - Free Report) and Moderna (MRNA - Free Report) , will have positive efficacy on this new strain.
That said, Covid-19 has now officially become the #1 cause of death in the U.S., with more than 3000 fatalities per day, and ICUs across the country beyond capacity, limiting the effectiveness of general healthcare. As one writer put it, this is the equivalent of more than a dozen fully loaded commercial airliners crashing per day. Vaccines are making their way into the arms of front-line healthcare workers, but it will likely be mid-2021 by the time everyone who ought to be immunized from Covid-19 will receive the vaccine. Which means we’ve still got more tragedy and pain to come.
A ray of good news this morning is that Congress will be voting today on an agreed-upon stimulus/relief bill worth $900 billion, along with $1.4 trillion in government funding. More than $160 billion of this deal will be mailed out as household checks, $120 billion will go to additional unemployment assistance and $325 billion will be allotted to small-business relief, including more than $280 billion in the previously successful Paycheck Protection Program (PPP). Businesses will also be able to deduct expenses from their PPP loans.
It’s a long time coming, but it’s here now. We hope to see certain economic metrics that have begun to twist in the wind — weekly jobless claims among the most troubling, recently — shored up soon after the monies are allocated. Perhaps the market indexes slowly building back closer to the green will provide the boost investors are looking for as we all pore over the details of this relief package.
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