We want to check the pulse of the global economic climate by looking at some important metrics from this past week – especially as lockdowns start to become a factor again and the second wave approaches. The Pfizer vaccine news on Monday triggered a sell-off in tech stocks and prompted a sharp, short covering rally of major indexes as well as individual Covid-sensitive stocks.
While the major indexes are clearly in bullish advances, the mid-week dip might be the start of a shaky period on Wall Street with all eyes on the worrisome Covid numbers. The mid-term outlook is one which troubles Wall Street the most due to its uncertainty regarding Covid cases. The S&P 500, the Dow, and the Nasdaq are all above their 50-day moving averages, and the benchmarks are also well clear of their 200-day moving averages. As measured by the Russell 2000, small-caps hit a new all-time high for the first time in more than two years as projected by The Forecast, and although the index finished the week below its new record high, it is comfortably above both of its moving averages. The Volatility Index (VIX) had another very active week, and even though the “fear gauge” finished above its multi-month low due to Covid-related worries, it closed well below both of its moving averages on Friday, near the 23 level.
Apart from the pandemic, the fate of the delayed stimulus package will likely be at the center of attention next week, as the economic calendar will once again be relatively light on key releases. We expect the prospects of a huge stimulus package from congress to buoy stocks into year end after a few wild swings next week and early December.
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