Hello, I’m Greg Curvall, Senior Portfolio Manager with Fifth Third Bank.
Last week U.S. equities were mostly higher, with the S&P 500 logging another gain while the tech-heavy Nasdaq Composite pulled back. Stocks started the week on strong footing, supported by the sense that the media had called the election for Joe Biden which removed some level of uncertainty. However, the week's narrative was dramatically changed after Pfizer announced results from its COVID vaccine trial that were much better than expected.
Pfizer and BioNTech announced that their COVID vaccine candidate demonstrated an efficacy rate above 90%. This rate was much better than expected as the FDA itself had only established a 50% threshold to support approval. Enough safety data to qualify for FDA emergency use authorization is expected to be available by the third week in November. However, after the exuberant initial reaction, questions began to be asked about distribution challenges. Though Pfizer has said it expects to have 50 million doses ready by the end of the year and more than 1 billion in 2021, it may prove difficult to inoculate enough people quickly in order to ease the need for widespread lockdowns and other mitigation measures.
The U.S. coronavirus resurgence continued to hit new records last week. The total number of COVID patients in ICUs now stands at the highest level since early May. There is an emerging sense among public-health officials that a good portion of the current outbreak can be traced not to large events, but to smaller, less cautious indoor gatherings such as dinner parties, game nights, and carpools.
While the prior week saw politicians from both sides of the aisle talking about the importance of further fiscal stimulus, very little progress has actually been made despite an obvious worsening of the domestic coronavirus situation. There were thoughts raised this week that the positive vaccine news could further weaken the case for additional spending, despite the fact a vaccine rollout could take some time to alter the trajectory of the pandemic. And hanging over the whole discussion is the still-unsettled question of Senate control, with Georgia's two seats heading to runoff elections. Democrats could have a functioning Senate majority if they win both races.
The Trump administration has continued its state-by-state legal challenges in the wake of the election, with the president continuing to argue publicly that the contest was rigged. While some GOP politicians and pundits have backed Trump's efforts to search for fraud and call for recounts, others have begun calling for the president to prepare to step aside.
In the week ahead, the economic calendar includes retail sales, which are forecast to increase for the sixth straight month in October. We'll also get housing starts, building permits and existing home sales.
As always, will be watching and reporting back to you next week. Thank you.
