S&P 500 Index opens near flat. Positive vaccine news sent the S&P 500 higher Monday, but the market seems to be pausing this morning.
- The S&P 500 Index finished a solid 1.2% higher on Monday, hitting its highest level in two months on positive vaccine news.
- Strong rotation toward small cap stocks and value-style stocks signaled the type of impact further vaccine progress may have on markets.
- Despite the solid day, the S&P 500 was well off its initial move higher.
- The MSCI Asia Pacific closed 0.4% higher, with the impact of vaccine progress diminishing overseas.
- The Stoxx Europe 600 traded modestly higher at midday.
- The ZEW survey, a key measure of German investor sentiment, showed waning confidence in the German economy amid rising COVID-19 cases.
Vaccine news. Positive vaccine news has continued to act as a catalyst for markets this year, but there still may be operational challenges around production and distribution. Monday’s move was a positive signal, but the market seemed to be pausing this morning as market participants further digested yesterday’s optimistic news.
Bonds shift away from post-election story. The 10-year Treasury yield fell sharply post-election as the market started to price in divided government and a potentially weaker stimulus bill. But positive vaccine news Monday reminded us the election isn’t the only story. The 10-year yield bounced sharply higher Monday, finishing at its highest level since March. Today’s LPL Research blog covers more on the bond market’s post-election reaction.
Veterans Day is Nov. 11. November 11 is Veterans Day and a Federal holiday. LPL Financial and the stock and bond markets will be open. Some banks may be closed.
Technical update. Year-to-date laggards rallied Monday, while mega-cap growth names lagged significantly. The S&P 500 set a new intraday record, at one point up as much as 3.9%, before closing more than 2.6% off its highs and failing to set a record closing high. Breadth was mediocre given the early gains, as advancers on the NYSE outnumbered decliners by just over 3:1. Value outperformed growth by 5.7%, the most in the history of the Russell 1000 Growth and Value indexes.
COVID-19 news. The surge in COVID-19 cases in the United States continued on Monday, rising 43% week over week, pushing the seven-day average up to 112,000, a 35% week-over-week increase (source: COVID Tracking Project). Hospitalizations rose 53% week over week, or 34% based on the seven-day average. The FDA approved Eli Lilly’s COVID-19 therapeutic for emergency use in mild cases, adding to this week’s string of good news on treatments.
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