Two of the three major U.S. indices closed the week on new highs, as certain sectors flourish during the downturn.
MANHATTAN (CN) — The week in which two of the three major U.S. indices hit new record high marks ended on a high note, mostly due to positive housing data and promising news on a coronavirus vaccine.
The S&P 500, which on Wednesday officially reclaimed all of its losses and set a new high bar of 3,389 points, finished the day at 3,397 points, a 0.35% increase for the day and another new high mark.
On Thursday, the Nasdaq — which has been the best performing of the three indices and earlier this summer recouped all its coronavirus-related losses — had netted a new high mark of 11,264 points. On Friday, the exchange also snagged headlines with a new record high of 11,311 points, a 0.42% increase for the day.
Lagging behind the other two exchanges, the Dow Jones Industrial Average still had a positive outing, gaining 191 points, a 0.7% increase.
The sizeable gains in equities lately has paralleled similar gains in another industry: housing. According to the National Association of Realtors, existing home sales last month increased nearly 25% to a seasonally adjusted annual rate of 5.86 million, hitting the highest level in 14 years.
Sales are now up 8.7% year over year, and the housing prices are up as well. The median existing-home price gained 8.5% from July 2019, with prices growing in every region. The South, in particular, saw a huge 44% gain in housing sales.
“The housing market is well past the recovery phase and is now booming, with higher home sales compared with the pre-pandemic days,” said Lawrence Yun, NAR’s chief economist, in a statement. “With the sizeable shift in remote work, current homeowners are looking for larger homes and this will lead to a secondary level of demand even into 2021.”
The better-than-expected home sales data helped spur bulls on Wall Street. “The mood on Wall Street is a little upbeat thanks to the robust economic updates,” wrote David Madden, a market analyst at CMC Markets. “There is an argument to be made the U.S. economy is rebounding faster than the eurozone, hence why the S&P 500 is showing a modest gain.”
However, some analysts caution against a similar bubble in the housing sector. “The low mortgage rates have induced people to buy, buy, buy, but the sharply rising prices are a warning that the market may be getting a little ahead of itself,” wrote economic consultant Joel Naroff. “Still, I will take any positive data that shows people are willing to spend money, especially on big-ticket items.”
More good news hit the markets late this week, with Pfizer and BioNTech publishing clinical data on a proposed Covid-19 vaccine that suggests the companies could be close to a viable vaccine.
The study found that their latest vaccine candidates have fewer side effects than the duo’s first attempt at a vaccine. The companies said they are on target to seek regulatory review of the vaccine as early as October and could possibly get 100 million doses out by the end of the year.
Pfizer stock gained 0.4% by the closing bell. Shares of BioNTech SE, a smaller company, gained more significant ground, finishing the day up 10%.
“[F]rom a stock market concern, it’s great for growth assets as planes will fly, the oil will flow, laggard industries will emerge from the Covid-19 fox and their stocks will soar,” Steven Innes, chief global market strategist at Axi Trader, wrote in an investor’s note. “Indeed, with a vaccine cure, a trip to your local clinic could be the one-stop recession plugger before the year is out.”
According to data compiled by Johns Hopkins University, nearly 23 million people have contracted Covid-19 worldwide, while roughly 795,000 have died. In the United States alone, 5.6 million have been confirmed infected while more than 174,000 have died.