The market rally tied to Pfizer’s promising vaccine announcement continues for a third day on Wednesday, with the Nasdaq posting gains for the first time this week, but the dampening prospects of fiscal stimulus and policy action in the coming weeks amid ongoing record-high coronavirus cases could seriously hinder the economic recovery.
Shortly after the opening bell, the Dow Jones Industrial Average was up 60 points, or 0.2%, and the S&P 500 up 0.6%, while the tech-heavy Nasdaq outperformed the broader market for the first time this week, climbing 1.4% after shedding nearly 3% on Monday and Tuesday.
Among firms leading market gains on Wednesday are Lyft, which is up nearly 6% after reporting better-than-expected revenue Tuesday after market close, and luxury fashion company Tapestry, which is on the cusp of turning positive for the year as it adds almost 5% on an analyst upgrade.
Meanwhile, shares of cloud-computing firm Datadog are down about 8% despite an earnings beat after a JPMorgan analyst downgraded the stock citing two-straight quarters of revenue deceleration, and Aurora Cannabis is tanking 19% after announcing a secondary stock offering.
In a note to clients on Wednesday morning, Goldman Sachs lifted its year-end S&P 500 guidance to 3,700–implying about 4% upside for the index in the next seven weeks, citing the likelihood of a divided Congress come January.
Crude oil is also rallying on the market’s renewed hope for value-oriented stocks (like those in energy, which is up nearly 20% this week), with U.S. benchmark West Texas Intermediate spiking 2.5% and hitting a more than two-month high.
Global markets also edged up: The United Kingdom’s FTSE 100 ticked up 0.9%, while France’s CAC 40 added 0.6%, while Japan’s Nikkei 225 ended the day up 1.8%, hitting a nearly 30-year high.
“The Pfizer vaccine data continues to reverberate throughout markets and is more than compensating for a darkened near-term Covid outlook and reduced chances for lame-duck U.S. fiscal stimulus,” says Vital Knowledge Media Founder Adam Crisafulli.
The stock market’s resilience throughout the pandemic and a divisive U.S. presidential campaign has been “remarkable,” Goldman said Wednesday morning, especially in light of the volatility. The market plunged 34% in the first quarter at the height of pandemic uncertainty and later rallied almost 60% from lows in March. Still, the broader economic recovery has been sluggish and key indicators like the labor market are still well below pre-pandemic levels. Experts, meanwhile, have been warning that the next few months could be among the worst for the coronavirus crisis, as gatherings pick up during the holidays. “The next six months are going to continue to be pretty choppy,” Federal Reserve President Eric Rosengren said of the economic recovery on Tuesday. “I hope that we still get a fiscal package, it’s probably not going to come as soon as we were hoping and that does mean that we’re not going to get as robust a growth over the next couple of quarters as we were hoping.”