MANHATTAN (CN) — Wall Street rounded out the week with another win, after a rocky few days brought on by coronavirus malaise peeled away the wins from Monday’s big rally.
At the closing bell on Friday, the Dow Jones Industrial Average gained 400 points, a 1.3% increase, while the S&P 500 had a nearly identical increase. The Nasdaq was only slightly behind with a 1% increase for the day.
Markets abroad, which also started the week off on the right foot, ended it with mild losses. Asian markets, with the exception of South Korea’s index, dropped slightly. Most European markets finished barely over the starting line, with the pan-European Stoxx 600 gaining just 0.01% on Friday.
The week began with a huge rally, as news broke that a Covid-19 vaccine candidate by Pfizer and German pharmaceutical company BioNTech was more than 90% effective in preventing the virus. The Dow gained 1,570 points at Monday’s opening bell, though it ended up with about half those gains by the end of that day’s trading.
Markets pulled back on Tuesday and again on Thursday as some analysts warned to expect choppy markets in the short-term, as it it is too soon yet to celebrate promising vaccine news.
“Looking ahead, as the health situation rapidly worsens and economic momentum slows, we forecast GDP growth averaging 3.6% in 2021, compared with last month’s forecast of 3.7%,” wrote Gregory Daco, chief U.S. economist at Oxford Economics. “Even with good news on vaccine developments, we stress that a broad-based health solution won’t be available for at least another six months.”
Each of the last five days has seen record new cases of Covid-19 in the United States, with more than 153,000 new cases coming in on Thursday. Worse, hospitalizations are higher than previous spikes in April and July, with some medical facilities in Michigan, Texas and Minnesota reportedly near capacity or facing bed shortages.
In total, more than 53 million cases have been reported worldwide, according to data compiled by Johns Hopkins University, and nearly 1.3 million people have died. In the United States, 10.6 million have contracted coronavirus, while more than 242,000 have died.
Meanwhile during a broadcast on C-SPAN, Dr. Anthony Fauci told Americans the battle is not yet lost.
“When I testified before the Congress four months ago, I said if we did not get control of this that we would reach 100,000 infections a day and people thought I was being hyperbolic, and now look what’s happening,” Fauci said.
If Americans observe social distancing and wear face masks, however, Fauci said the current spike could end.
In the economy, as coronavirus cases have waxed, confidence now wanes. Preliminary results from the University of Michigan’s consumer confidence index show the lowest point since August, with the index dropping about 6 points from October. The index does not include the vaccine news from Pfizer.
The election is thought to have played some role in confidence dropping — a trend seen in other recent surveys. Survey Chief Economist Richard Curtin noted in a statement that Republicans have voiced the least favorable economic expectation since President Trump took office, while Democrats are more optimistic.
“In the months ahead, the partisan gap is likely to enlarge, although the gains will be limited until a potential vaccine is approved and widely distributed,” Curtin said.
Markets, too, have grown weary of the current political landscape. While initially happy with Joe Biden’s projected victory last weekend, the fact that President Trump has not conceded, and his myriad legal fights to contest votes, have kept markets down. Trump has claimed, without providing proof, that hundreds of thousands of votes in several states actually should have gone his way, netting him the win.
Yet among most Americans, including a growing contingent of Republican lawmakers, Biden is believed to be the rightfully elected president.
“Mr. Trump never had any legal cause for his grievance, but his lying and disinformation campaign could have created serious political risks if a large part of the population was willing to believe his claims,” wrote Boris Schlossberg of BK Asset Management. “That threat appears to be gone and markets may be seeing a small relief rally as a result.”
The residual rancor from the presidential election nevertheless has bled into hopes for a fourth stimulus package, according to Tom Essaye of the Sevens Report. He added that “the looming Georgia [Senate] runoffs complicate the stimulus negotiations, while the impending disbursement of the Covid vaccine and so-far-resilient recovery are putting downward pressure on the overall size of the stimulus bill.”
A fourth stimulus is likely to happen, experts say, but the size of the legislation could be pared down as unemployment claims fall steadily and the economy continues to climb uphill.
According to the Labor Department’s recent data, only 709,000 new unemployment claims were filed for the week ending November 7, a drop of 48,000 from the previous week. More than 21 million Americans were claiming benefits in state and federal unemployment programs as of the week of October 24, however.
The persistent unemployment and uncertain future for the current recession have many experts pleading for another stimulus package as many workers are being left behind.
“We’re not going back to the same economy,” said Federal Reserve Chair Jerome Powell during a talk at the European Central Bank Forum on Central Banking. “We’re recovering, but to a different economy, and it will be one that is more leveraged to technology. And I worry that it’s going to make it even more difficult than it was for many workers.”
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