Morning Minutes 11/10/2020

Morning Minutes

Markets Digest Vaccine Rallies and Sector Swings

November 10, 2020

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Market Commentary By:
Colin Cieszynski, CFA, CMT
Chief Market Strategist
ccieszynski@siawm.com
+1 (647) 282-4428

Coming off of a very mixed day for US markets which saw significant divergences between indices, US index futures are split again this morning. Building on yesterday’s 2.95% gain for the Dow, Dow futures are up another 0.7%. S&P futures are down 0.25%, however, after the S&P gained 1.1% Monday. The technology and communications sensitive NASDAQ is looking lower again with NASDAQ futures trading down another 1.6% following yesterday’s 1.5% drop.

Yesterday’s encouraging vaccine news sparked a significant rotation of capital between equity market groups. Sectors, which had seen a lasting negative impact from COVID shutdowns roared back to life including airlines, cruise lines, casinos and hotels. On the other hand, capital rotated out of sectors which had benefitted from the “stay-at-home” economy, including internet and some online retailing sensitive stocks, retreated.

So far today, these swings appear to have stabilized so it remains to be seen if this was a short-term move or the start of a prolonged change to investor sentiment. Additional positive news came out later in the day as the FDA approved a COVID antibody treatment from Eli Lilly (up 3.4% premarket) for emergency use.

It’s a quiet week for economic news but there have been a couple of corporate announcements of note. Beyond Meat is getting hammered this morning, down 21.4% in premarket action after the company reported a surprise loss (-$0.28 vs street +$0.05) and a big shortfall in sales ($94.4M vs street $132.8M), which the company blamed on an 11% drop in sales through restaurants.

Commodity action is mixed this morning with WTI Crude oil up 0.4%, Brent Crude climbing 0.6% but copper falling 1.1% s short-term economic uncertainty remains as COVID wave 2 continues even though progress on linger-term solutions continues to advance. Precious metals have bounced back with silver bouncing 1.8% and gold climbing 1.0% although it remains below $1,900/oz.

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