The time has arrived to thank all good things in life despite the scars of pandemic. Notably, back-to-back positive vaccine updates have offered sweet surprises to Wall Street from the start of the Thanksgiving month this year. The mood became happier this week on a spate of health and economic updates. Let’s discuss in detail.
Vaccine Hopes
In early November,
Pfizer Inc.
PFE
and
BioNTech SE
(BNTX) came up with encouraging updates on their coronavirus vaccine candidate, BNT162b2. The candidate finally reflected a vaccine efficacy rate of 95% last week.
Moderna
MRNA
also said that its vaccine was more than 94% effective in preventing the virus.
And the third good news came on Nov 23 as AstraZeneca (AZN) said its vaccine, developed in collaboration with the University of Oxford, was evaluated over two different dosing regimens. “One showed an effectiveness of 90% when trial participants received a half dose, followed by a full dose at least one month apart. The other dosing regimen showed 62% efficacy when given as two full doses at least one month apart,”
per CNBC
. Overall, it showed an average 70% effectiveness.
Upbeat Holiday Sales Despite Pandemic
If this was not enough, one should not forget that the fourth quarter, which encompasses the holiday season, is apparently up for solid online sales. Holiday gift-giving and consumers’ purchases for themselves will cause 15% growth in U.S. appliance and houseware sales this holiday, according to NPD, as
quoted on Forbes
. The National Retail Federation (“NRF”) announced overall holiday sales during November and December will rise between
3.6% and 5.2%
, based on some of the pent-up demand.
Renewed Stimulus Hopes
Then Treasury Secretary Steven Mnuchin rekindled stimulus hopes. On Nov 19, Mnuchin “asked the Federal Reserve to shut down five emergency COVID-19 relief facilities and
return $455 billion of unused funds
, a move opposed by Fed Chairman Jerome Powell.”
Notably, in March, the Congress had approved a $2.2 trillion of emergency relief under the CARES Act, which included $500 billion to enact a variety of emergency lending facilities through the Fed and guarantee loans. Out of this, only a trivial portion of the funds — $25 billion — was used.
Now Mnuchin wants to discuss a targeted stimulus package with Democrats
. Probably the unused funds will help them come up with a stimulus package.
Chances of Divided Congress
Apart from this, the global markets have been rejoicing in the possibility of a divided congress in the United States. A divided congress or balanced government means status quo. Some of Biden’s proposed policies (like tax hike) may not see an easy passage in such a scenario.
Against this backdrop, below we highlight a few sectors that could pull the string of the markets in the Thanksgiving week.
Retail
NRF noted that the retail sector has witnessed a V-shaped recovery as the aggregate retail sales grew both sequentially and year-over-year each month since June. For the first 10 months of this year, retail sales were
up 6.4% versus the first 10 months of 2019
, per NRF.
Ecommerce sales were up 36.7% year over year during the third quarter. NRF expects that online and other non-store sales will grow between 20% and 30% this year. This makes it important to have a look at
Wayfair Inc.
W
. The Zacks Rank #2 (Buy) company is one of the world’s leading online sellers of home goods products, consisting of furniture and home decor.
Energy
The coronavirus-led global slowdown weighed on oil demand. Mounting concerns over a second wave of coronavirus cases have threatened demand further in recent sessions. This is especially true as the major parts of the Europe like Germany, France and U.K. are under lockdown now. Citi recently slashed its 2021 Brent and West Texas Intermediate crude price
outlook by $5 to $54 and $49, respectively
.
In such a scenario, any positive update on vaccine has every reason to boost the energy sector. Investors can have a look at Zacks Rank #2 independent energy explorer
Antero Resources Corporation
AR
.
Banks
Banking stocks have been rather beaten down in the past few months as fears of higher defaults at the household and corporate levels hit the space hard due to the economic slowdown. If markets continue to rally on vaccine and stimulus hopes, we may end up seeing a steepening yield curve.
So, banking stocks that are currently offering value now will have chances of outperforming. Moreover, IPO and merger and acquisition activities have been robust. One can thus take a look at Zacks Rank #1 (Strong Buy)
Piper Sandler Companies
PIPR
. It is afocused securities firm dedicated to delivering superior financial advice, investment products and transaction execution.
Homebuilding
The sector has been in fine fettle this year. Migration-to-suburbs to take advantage of less-pricey homes, millennial-led demographics and low mortgage rates are the positive factors in the space. Zacks Rank #1
PulteGroup Inc.
PHM
, which engages in homebuilding and financial services businesses, primarily in the United States, can be tapped in this regard.
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