Stocks rally vaccines, stimulus hopes, and robust iPhone demand, dollar softer ahead of Fed

Moderna boosts US equities

US stocks are rising on optimism that Moderna’s vaccine will take a step closer toward FDA authorisation, lawmakers will pass a compromised stimulus package, and as Apple raises their iPhone production goals for the first half of next year.

Moderna’s path toward FDA authorisation is expected to mirror what Pfizer did last week.  If all goes as planned, today Moderna will have positive news from FDA briefing documents.  Tomorrow, the FDA advisory will meet, with expectations for the FDA to grant EUA on Friday.  Wall Street has firmly priced in the successful launch of both Pfizer and Moderna’s COVID vaccines, so any supply disruptions or problems with execution will weigh heavily on the short-term outlook.

Congress to vote on split stimulus bill 

Inevitable lockdowns should be the needle that breaks the stimulus stalemate’s back.  Congress will have to vote on two bills before the end of the week.  The first is a USD748 billion package that is mostly agreed upon covers additional unemployment benefits, rent assistance, and the extension of PPP.    The second bill has all the sticking points; liability protection for businesses and aid for state and local governments.  The government avoided a shutdown last week with a temporary funding bill that expires on December 18th.  Optimism is fairly high something will get done since Democrats seem willing to drop state and local aid for now.

Apple stock could be on the rise

Now is not the time to give up on FAANG stocks.  While cyclicals embrace the beginning of COVID vaccinations, the current COVID world we live in could last 3-6 months and that will likely keep demand high for the stay-at-home stocks.  Apple is expecting to make 96 million iPhones for the first half of 2021, a 30% increase from a year ago.  Nikkei Asia reported that Apple might sell 230 million old and new iPhone models in 2021.  Apple’s stock peaked in early September and could finally be getting its groove back here.

Fed meeting weighing on US dollar

The dollar is slightly softer ahead of a wrath of the central bank rate decision later this week.  The Fed begins its two-day policy meeting and some traders are expecting them to provide more easing via yield curve control.  The consensus trade for next year is for the dollar to become a punching bag and for that to happen the Fed has to remain ultra-accommodative.  The Treasury market seems to be expecting the Fed to keep interest rates in check as the 10-year Treasury yield remains stubbornly stuck around the 0.900% level.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya