What CEOs Are Saying

By Nicholas Jasinski |  Thursday, November 19

Tug-of-War. Promising vaccine developments versus rapidly increasing coronavirus cases. Weighing the future economic and market implications of those two forces remains in the forefront of investors' minds.

Stock indexes wavered near the break-even line today, before moving into positive territory in the final hours of trading after a glimmer of fiscal stimulus hopes. A concrete bill remains elusive, but could be just what the recovery needs to bridge the gap until a widely distributed vaccine means the economy can stand on its own. That would do much to remove the stock market's concern about Covid-19 restrictions' near-term impact on the economy and corporate profits.

The Dow Jones Industrial Average closed up 45 points, or 0.2%, after being down more than 200 points at its morning lows. The S&P 500 ticked up 0.4%, the Nasdaq Composite rose 0.9%. and the Russell 2000 gained 0.8%—also reversing an earlier loss.

This morning's economic data showed 742,000 initial claims for unemployment benefits in the latest week, 31,000 more than in the prior week. That’s bad news. Economists had expected a total of 710,000. But continuing claims dropped to 6.4 million, just below consensus and compared 6.8 million a week earlier. That’s good news.

Speaking today, Sen. Chuck Schumer said that congressional Democrats and Republicans would resume talks over a potential Covid-19 relief and fiscal stimulus bill. That's good news because it's better than not speaking, presumably. Last they spoke, the two sides were far apart on a deal. A government shutdown deadline also looms on Dec. 11.

The U.S. recorded 163,975 confirmed cases of Covid-19 on Wednesday, according to the Covid Tracking Project, as the cumulative death toll surpassed 250,000. The Centers for Disease Control and Prevention advised Americans not to travel over next week’s Thanksgiving holiday. Oregon, Michigan, New Mexico, and Washington are among the states to issue restrictions on nonessential businesses, limit private gatherings, and close schools. California declared a curfew beginning at 10 p.m. across most of the state.

Other states and localities across the U.S. have imposed lesser or more targeted measures to slow the virus’ spread. New York City public schools moved to online-only instruction starting Thursday. Mayor Bill de Blasio also warned that indoor dining might be shut down in the near future.

All of that is bad news.

On the vaccine front, AstraZeneca said that its candidate demonstrated a strong response in older adults. More incrementally positive news there.

All together, the news paints a mixed picture. The current market may lack a definite direction until one set of catalysts is stronger than the other. Until then, expect plenty of up days, down days, and middling days like today.