ETF Strategies to Gain From US Market Optimism
Zacks Investment Research | Nov 16, 2020 03:46AM ET
The mood in Wall Street is upbeat as the S&P 500 has risen 2.2% in the week ending Nov 13. The 30-stock Dow Jones Industrial Average has also rallied more than 4% in the week, hitting an intra-day record (according to a CNBC article).
The recent coronavirus antibody and vaccine development raises hopes of a vaccine soon. On Nov 9, Pfizer (NYSE:PFE) and BioNTech announced the efficacy of their mRNA-based coronavirus vaccine candidate, BNT162b2. According to the companies, the vaccine was more than 90% successful in preventing COVID-19 in participants without prior evidence of SARS-CoV-2 infection. The results are based on the first interim efficacy analysis conducted on Nov 8, by an external, independent Data Monitoring Committee from the Phase 3 clinical study, per the company. The news has instilled optimism in the market.
Meanwhile, total number of coronavirus cases has crossed 54 million globally. Notably, the world’s largest economy has seen more than 11 million cases alone. Thus, the worsening coronavirus crisis is raising desperation among investors over the introduction of a vaccine.
On the other hand, Eli Lilly and Company (NYSE:LLY) recently announced that its investigational neutralizing antibody bamlanivimab (LY-CoV555) 700 mg has been awarded Emergency Use Authorization (EUA) by the FDA.
Moreover, the chances of a divided Congress in the United States seem more likely, where Republicans can continue to control the Senate and Democrats, the House. Thus, as a result of this political gridlock, major and stringent changes in the corporate tax policies will be very difficult to implement in the medium-term. Thus, easing worries regarding major policy changes are making the investing environment more friendly for market participants.
Going on, the United States is pleasantly surprising market participants with upbeat economic data. Notably, the world’s largest economy delivered an impressive performance in third-quarter 2020, beating market expectations. Going by, the Department of Commerce’s report on Oct 29, GDP surged to a record high at an annualized pace of 33.1% after declining 31.4% in the second quarter.
The manufacturing sector is also picking up despite the coronavirus crisis. According to the Institute for Supply Management (ISM) report on Nov 2, its Purchasing Managers' Index (PMI) for manufacturing surged to 59.3% in October, increasing 3.4 points from last month and surpassing the consensus estimate of 55.9%. In fact, the October figure stood out as the highest PMI reading since September 2018.
Furthermore, the housing market continues to be a bright spot in the U.S. economy as it recently delivered a streak of encouraging data. The recently-released data on the U.S. builder confidence was impressive as well. Per the monthly NAHB/Wells Fargo Housing Market Index (HMI), Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
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