Rolling coverage of the latest economic and financial news
- Latest: FTSE 100 up 1.7% as rally continues
- Pfizer/BioNTech vaccine optimism lifts markets
Earlier:
- Introduction: UK unemployment picture is worsening
- Unemployment rate up to 4.8% – highest since 2016
- Economists: Furlough scheme winddown pushed up job losses
- The key charts
The Nasdaq has now dropped by more than 2% today, as vaccine optimism triggers a rotation out of tech stocks and into ‘value’ stocks like industrials and energy firms.
As Marketwatch puts it:
The Nasdaq, was under pressure as progress toward remedies and treatments for the coronavirus has investors selling some of the biggest pandemic-era winners and using the proceeds to buy assets that might benefit from the most from a successful vaccine.
U.S. stocks putting in mixed performance as vaccine progress sparks rotation https://t.co/ViTGq9xlKD
A look at the risers and fallers on the Dow Jones industrial average shows that vaccine optimism is driving a rotation in the markets today.
Aerospace manufacturer Boeing is the top riser, up 6%, followed by retail group Walgreen Boots (+5%). Conglomerates Honeywell (+2.7%) and 3M (+2.3%) and construction machinery maker Caterpillar (+2.2%) are gaining more ground.
Today marks the second day that we are seeing the spread between momentum and value widened significantly. Investors finally seem happy to rotate out of the work-from-home plays in the tech sector, and into stocks that rely on economic growth, which had underperformed during the post lockdown melt-up.
Yesterday’s announcement from Pfizer on the progress made in coronavirus vaccine seems to have been a game changer, even if experts warn that production and distribution may take time. The markets always try and price in future outcomes, so the reaction makes some sense, even as the virus may not be ready until the middle of 2021.