US stocks raced higher on Moderna’s upbeat vaccine news, which along with Pfizer’s vaccine, raise expectations for a return to pre-pandemic life before next winter. The rotation into value stocks continues as the best-case vaccine scenarios unfold. Last week, Pfizer gave hope that vaccine progress was getting us closer to a post-Covid economy. Today, Moderna’s vaccine news cemented optimism that highly effective vaccines should be readily available next year.
The Russell 2000 index hit a fresh intraday record high, the Dow is poised to surge above 30,000 and the Nasdaq is still seeing some love.
Moderna announces Covid vaccine
On paper, it looks like Moderna won the vaccine race, a slightly more effective rate than Pfizer and much easier to store. But this would be Moderna’s first approved drug for vaccination and will likely mean they will have more hurdles for ramping up production. Operation Warp Speed will provide all the resources to both Pfizer and Moderna and possibly others.
RCEP bcomes world’s largest trading bloc
The Asia Pacific region just delivered the world’s largest free trade deal. The Regional Comprehensive Economic Partnership (RCEP) includes 15 countries and over 2.2 billion people, or nearly 30% of the world’s population. It took almost a decade, but China, Japan, South Korea, Australia and New Zealand will greatly help the region’s recovery from COVID-19. The Nikkei 225 surged to the highest levels since 1991, the Kospi made a 33-month high, while the ASX had to abandon their session after experiencing their worst glitch since 2016. The Hang Seng and CSI 300 also benefited from China’s better-than-expected factory output data, while retail sales continued to post growth, albeit at a slower-than-forecast pace.
US manufacturing indicator slips
The latest Empire State manufacturing survey showed another lackluster reading. The headline reading fell over 4 points to 6.3 and missed the consensus estimate of 13.5. It seems the NY region is lagging others as growth continues to slow. New orders and shipments dropped significantly, and this could raise expectations for the other regional surveys to post similar declines. The bright spots of the survey showed employment continues to rise and that firms still remain optimistic. The virus spread should provide further pressure with next month’s readings and raise the pressure for Congress to deliver more fiscal support.
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