U.S. Stock Futures Marginally Higher
U.S. stock futures were marginally higher on Monday morning as investors geared up for the holiday-shortened week. Investors appeared to be digesting developments on the vaccine front following AstraZeneca (AZN Stock Report) reported that its vaccine achieved an efficacy of 70% in its large-scale trial. On the other hand, the surge in COVID-19 infections continued to weigh on sentiments, clouding the near-term outlook. Earlier this month, a powerful stock market rally took hold with the steady flow of vaccine news from Moderna (MRNA Stock Report) and Pfizer (PFE Stock Report).
Investors are looking to brace for heightened volatility within the stock market from the surging COVID-19 infections. The Dow, S&P 500, and Nasdaq futures were marginally higher, moving 0.71%, 0.64%, and 0.36% higher respectively as of 7.45 a.m. ET.
“Stocks this week will trade on lockdown concerns and rising cases, but could see a boost into early December as the optimism around a near term, stopgap stimulus package grows…“Overall, the push and pull between tech stocks and cyclicals will likely continue through the next couple of weeks, and we could see some tough days as economic data is released that reflects the deterioration in consumer spending we are currently experiencing.”– Shannon Saccocia, Chief Investment Officer at Boston Private.
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The spike in coronavirus infections has led to the introduction of restrictions in certain parts of the country. The U.S. topped 200,000 cases for the first time on Friday, putting further pressure on the already-stretched healthcare system. Over the weekend, the FDA grants emergency authorization for COVID-19 treatment from Regeneron (REGN Stock Report). This is the same antibody cocktail treatment President Trump received when he had COVID-19.
Pfizer and BioNTech (BNTX Stock Report) have also applied for FDA’s emergency use authorization for their coronavirus vaccine. Moderna could follow suit in the coming days. Approval by the FDA will likely happen soon after an advisory panel meets in early December. According to the Telegraph, which cited government sources, Pfizer’s coronavirus vaccine could win U.K. approval in the coming days.
Black Friday Sales
While investors will be taking a short break from the shortened trading week, retail companies are prepping up for what typical years tend to be one of the busiest weeks. During holiday seasons, many analysts come up with predictions about the level of Black Friday sales. All eyes will be one how actual sales stack up against those forecasts. Of course, we would all like to see consumers spending more. If so, that could be an indication of a potent recovery in retail stocks and consumer stocks more generally, if not the broader economy.
“This holiday season will obviously be unique,” Walmart CEO Doug McMillon said. “While many family gatherings may be smaller, we do believe families want to decorate, celebrate, and enjoy food and gifts. They want a sense of normalcy.”
Nevertheless, there remain risks. With new coronavirus cases and hospitalizations surging to record levels in the U.S. and globally, it would be key to watch how consumers behave during the shopping season.
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Oil Prices Pushes Higher With Vaccine Optimism
Oil price moves higher after closing at the strongest level since we last saw in early September. The progress in vaccine developments, coronavirus treatments, and expectations that OPEC+ to potentially extend the current output cuts are giving bulls the reasons to celebrate. You can see that optimism in the futures curves. WTI and Brent time spreads are nearer to backwardation, where near-term contracts cost more than later-dated ones. This suggests that fears of a glut have subsided. After all, I guess many can’t wait to get their vaccine shots before finally going on a holiday again.
Retail Earnings
Retailers are once again among the companies reporting earnings this week. The third-quarter earnings season continues to wind down. The big names to report this week include Target (TGT Stock Report), Walmart (WMT Stock Report), Best Buy (BBY Stock Report), and Home Depot (HD Stock Report). There are also other notable names reporting this week from the tech space as well. They include Autodesk (ADSK Stock Report), Dell Technologies (DELL Stock Report), and HP (HPQ Stock Report). So, whether it is in terms of COVID-19 headlines, oil recovery, or earnings, there’s a lot to digest in this shortened week.
