Markets Moving Higher on Expectations for Vaccine Success
By: Mitchell Anthony
November 25, 2020
Is the Covid Bounce Sustainable?
The distressed areas of the US equity market have rallied hard over the last few weeks pushing the Dow Jones industrial average over 30,000 for the first time. This occurred after three vaccine makers announced that they had achieved over 90% efficacy with their vaccines. This really exciting news caused investors to scoop up airline stocks, REITs, hotels, casinos, energy, and automakers. Since November 10th the equity market leadership has been dominated by highly distressed cyclicals and industrial names and other so-called re-open names in the equity market. We also saw strength in Biden industries including environmental stocks and semi-conductors companies that are poised to benefit from new policies that Biden plans to enact once in office. At the same time we have seen the stay at home names pause after a steady and substantial six month rally. The FAANG has been flat for the last three months while at the same time these distressed value names have advanced 5 to 10% or more. Is this three week move in these distressed areas of the market sustainable? How far will distressed areas of the equity market go on the come of substantial vaccine success? These are questions that we have been asking ourselves along with the rest of the Wall Street strategists who have pondered on the change of leadership that has just occurred over the last few weeks. Read more
