November 9, 2020
Pfizer Corp. (NYSE‐PFE) announced early this morning that its Covid‐19 vaccine human trials have been 90% effective overcoming the virus in infected individuals. The news caused a virtual explosion in equity prices in Europe and in pre‐market futures trading in the US. (1)
At this writing, roughly 20 minutes prior to the opening of trading, indications are that most benchmark indexes will open better than 5% higher across the board. European markets are currently trading better than 5% higher. If the gains hold through the close, US markets will end in new all‐time high territory.
Over the weekend, media outlets declared Joe Biden has won the Presidency, which in some articles is being cited
as a contributing factor to this morning’s upsurge. Futures had been up roughly 1.5% overnight but jumped to much higher levels when the Pfizer news was released, just before 7 AM EST.
Today will mark the beginning of the legal battle to determine the official winner of the Presidency amid allegations of voter fraud and digital manipulation of vote totals in up to five closely contested states. We expect the proceedings will ultimately reach the Supreme Court, which suggests final resolution of the election remains a future event.
The underlying fact is that the US economy has been in a strong recovery since April and if the specter of Covid‐19 can be conquered by vaccination, stocks are likely to continue to trade higher. Valuations remain relatively low and corporate earnings over the past two quarters have been consistently higher than expectations. Coupled with strongly positive consumer sentiment, we can reasonably expect that this trend can be maintained into next year.
Byron A. Sanders
(1) “Pfizer’s Covid‐19 Vaccine Proves 90% Effective in Latest Trials,” www.wsj.com, November 9, 2020.
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