U.S. Stock Futures Marginally Lower
The U.S. stock futures were slightly down on early Monday morning. This followed a record session last week that sent the Dow to its all-time high. The major indexes posted intraday and closing all-time highs on Friday, with the Dow popping more than 200 points. The S&P 500 and Nasdaq Composite climbed 0.9% and 0.7%, respectively. These gains were rather unusual considering the stock market has been slammed with disappointing U.S. jobs data.
“The clear message is that while the recovery in the labor market has lagged behind the recovery in overall GDP, both continue to regain ground lost during the lockdown recession of March and April,” – Ed Yardeni, President, and Chief Investment Strategist at Yardeni Research
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 lower, moving 0.38%, 0.39%, 0.07% lower respectively as of 6.50 a.m. ET on Monday.
Pfizer Vaccine News
The stock market has had a good run in recent weeks. That’s owing to the positive developments in Moderna’s (MRNA Stock Report) and Pfizer’s (PFE Stock Report) coronavirus vaccines. Pfizer was the first to file for emergency use authorization (EUA) with the FDA. Its vaccine is 95% effective against getting the novel coronavirus. The FDA said that it would convene a meeting of its outside scientific advisory board, the Vaccines and Related Biological Products Advisory Committee (VRBPAC) this week, on December 10.
After the VRBPAC reviews the data, members of the committee will vote on whether or not to recommend the FDA to authorize the vaccine. The vote could take place as soon as the day itself. While the FDA is not bound by the outcome of the vote, it has typically followed the recommendations of the VRBPAC. The U.K. was the first country in the world to approve a coronavirus vaccine for its citizens. Should the FDA grant authorization, we could expect the vaccines to be distributed to the states after 24 hours. Should that happen, could we expect another rally in the stock market?
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Airbnb & DoorDash IPOs
Among the highlights in the stock market, this week will be the initial public offerings (IPOs) of two household tech start-ups. DoorDash and Airbnb expect to go public on December 9 and December 10 respectively.
DoorDash could see higher demand as the company has been a beneficiary of stay-at-home measures. This could simply be because customers increasingly turned to online food delivery services. And the latest financial results from DoorDash have reflected a boom in demand. The company will market 33 million shares at a price between $90 to $95 a share, according to the filing. That’s an increase from its previous price range of $75 to $85. With the higher price, DoorDash will have a fully diluted valuation above $35 billion.
On the other hand, Airbnb has seen its business struggling in the face of the pandemic. Hence, it is no surprise that many investors are cautious about participating in Airbnb’s IPO. Some are wary of how the company can continue growing its revenue and profit. While challenges remain, Airbnb’s business could stabilize after the pandemic ends. Still, that has not stopped the company from raising IPO price to a range of $56 to $60 per share. That gives it a valuation of up to $42 billion on a fully diluted basis. Previously, the price range was between $44 and $50.
Oil prices were under pressure starting the week. The weaknesses in oil prices came as a continued surge in coronavirus cases globally renewed the likelihood of possible lockdowns. Brent crude oil futures fell 37 cents, or 0.75%, to $48.88 a barrel at 6.50 a.m. ET. Meanwhile, West Texas Intermediate oil futures were 43 cents or 0.93% lower, at $45.83 a barrel. Both benchmarks have risen for five weeks in a row.
“Crude pared earlier vaccine roll-out gains after Los Angeles county had another record high in coronavirus cases and South Korea raised their alert level,” said Edward Moya, senior market analyst at OANDA. “Adding to the pressure on oil prices is the potential Iranian increase to production in three months. Iran is optimistic the U.S. will ease restrictions if they return back to the 2015 nuclear deal,” Moya added.
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Earnings Report Winding Down
Earnings for software companies have seen them crushing analysts’ estimates. Recall that we saw strong reports from major retailers and software providers in recent weeks. As we continue to wind down the earnings season, there are still some big names reporting their results this week. These include MongoDB (MDB Stock Report), Costco (COST Stock Report), Oracle (ORCL Stock Report), and Adobe (ADBE Stock Report). As such, if you are looking to buy some epicenter stocks ahead of a vaccine roll-out, invest in tech IPOs or to follow earnings reports, there is enough to keep you busy this week.