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Diminishing COVID 19 vaccine optimism news flow effect on US stocks

CMC Markets

Yesterday marked the 4th consecutive Monday ahead of the US session open for a dose of positive COVID-19 vaccine news flow where one of the leading vaccine developers, Moderna reported that an updated that its vaccine was 94.1% effective in preventing COVID-19 and 100% effective in protecting against a serious outcome.

However, the major US stock indices had ended on a softer note with worst underperformers seen in the Dow Jones Industrial Average -0.9% (29638) and Russell 2000 -1.9% (1819) while S&P 500 shed -05% (3621). Despite a recovery seen in the Nasdaq 100 that led it to close almost unchanged +0.08% (12268) but it was mainly assisted by Apple +2.1% where an analyst upgrade from buy to hold at Loop Capital while the rest of the Big Tech ended in the red; Amazon (-0.8%), Microsoft (-0.5%), Google/Alphabet (-1.8%), Facebook (-0.3%). Hence, yesterday’s performance seen in the US stock market did not indicate a clear rotation back into Big Tech stocks.

S&P sectors performances also indicated weakness in nine sectors with value oriented Energy being the worst performer that declined by -5% reinforced by an undecided OPEC+ whether to extend production cuts for three months starting Jan 1. On the other hand, Information Technology led with a gain of 0.7% with stellar performance seen in Semiconductor stocks in general where the PHILX Semiconductor ETF advanced by +1.2% to hit another fresh all-time high 362.23

Overall, the COVID-19 vaccine optimism news flow’s positive effect on US stock indices has been diminishing since the first one from Pfizer/BioNTech that trigged the S&P to soar to a fresh all-time high of 3645 on Nov 09. Hence, further positive vaccine development news flow is likely not going to be the main catalyst to drive US stock indices to fresh new all-time highs going forward as such news seem to have almost priced-in fully and the markets need a new trigger perhaps it will be the Fed FOMC on Dec 16 for more “liquidity pumping” guidance.

Tesla, one of the major “poster boy stocks” in the current bubbly liked EV (electric vehicle) bullish trend had shed -3.1% (567.60) at the end of yesterday’s US session but managed to erase almost all its losses by an advance of +4.3% (592.10) in the after-hours trading session after a report that stated Tesla will be added to the S&P 500 in one shot before the US market opens on Dec 21. Another major EV stock did not share the same fortunate as Tesla, Nio Inc, a car maker from China listed in the NYSE tumbled by -6.4% (50.53). An interesting point to note, the share price of Nio has surged by an astonishing 1258% year-to-date versus Tesla’s performance of 599% based on yesterday’s closing prices.