Tuesday, December 15, 2020
Will Santa Deliver This Year?
December historically has been a good month for stocks, but gains usually occur at the end of the month. We look at stocks, high-profile IPOs, and COVID-19 vaccines in this week’s Market Signals podcast.
Stocks open higher. US stocks opened higher after a four-day slump, the longest down stretch since September.
- European stocks are modestly higher in midday trading with the United Kingdom underperforming on continued Brexit jitters.
- Asian markets were mostly lower, with Hong Kong the underperformer.
Proposed Stimulus Package Puts off Thorniest Issues. A bipartisan group of senators has proposed an approximately $750 billion stimulus package.
- The proposed package does not include business liability protection or state and local government aid, which would be part of a second smaller package.
- The approach seems to be gaining backers, raising the odds that a stimulus package may be passed by the end of the year.
Fed Meets Today. The Federal Reserve (Fed) begins its two-day policy meeting today and will conclude Wednesday at 2 p.m. ET with the release of the Fed’s policy statement, updated economic projections, and a press conference by Fed Chair Jerome Powell.
- The Fed is widely expected to keep its policy rate at its current level for years.
- The Fed could provide additional support to the economy by increasing bond purchases, increasing the maturity of bond purchases, or providing forward guidance on how it will handle bond purchases.
Four more years of dollar weakness? The US Dollar Index (DXY) is down 12% since the market lows in March, making multiyear lows as recently as Monday. But there may be reasons to think this trend could continue not just in 2021, but beyond. We explore later today on the LPL Research blog.
More positive vaccine news. COVID-19 vaccinations started in the United States on Monday, but production and distribution to the broad population will take time.
- Moderna’s vaccine may receive approval by the end of the week.
- Vaccines from AstraZeneca and Johnson & Johnson are in the pipeline, but approval will likely take months.
Technical update. The S&P 500 Index declined for a fourth consecutive day on Monday, falling 0.4%. Despite the recent slip, internal selling pressure has been muted, with the Monday marking the worst day of breadth at just over 2:1 decliners vs. advancers on the New York Stock Exchange.
COVID-19 news. The week-over-week 7-day average change in new daily COVID-19 cases continues to subside, now down to 7.6%, as recent restrictions curb activity (source: COVID Tracking Project).
- 7-day average positive rate remains elevated at 11.4%
- Week-over-week hospitalization growth is moderating, with the 7-day average down from its peak in early December.
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