Market indexes began the day solidly in the green, but a bit of bearish trepidation crept in during the day, helping the Dow and S&P 500 finish down. The Dow, which had an intra-day high of +279 points, wound up closing down 186 points — lower by 0.62% on the day. The S&P 500 saw its fourth straight close in the red, following a strong showing earlier this month and last.
The Nasdaq closed up 0.5% on the day; it had been eyeballing a new all-time closing high, but fell short of that mark. It was led by Tesla (NASDAQ:TSLA) TSLA, +4.5% — one week from its official inclusion in the S&P 500, which will shore up Tesla investment across a wide swath of ETFs and mutual funds — and Alexion ALXN, +35% on reports that it will be bought out at a sizable premium by AstraZeneca (NASDAQ:AZN) AZN. The small-cap Russell 2000 was up 0.11% on the day.
It’s a momentous day in the U.S., as the first Covid-19 front-line workers ceremoniously receive their first doses of the Pfizer PFE-BioNTech BNTX vaccine, but much of the success of the vaccine — indeed, of an outlook toward a pandemic-free global economy — has already been priced into valuations to an extent. The vaccine has rightly received the lion’s share of news headlines today, but it has not dictated the wary tone of market participants — an agreement (or lack thereof) for relief passed through Congress has.
Currently being discussed is the passage of $160 billion in State and Local aid with guardrails for distribution and certain liability protections for employers. What this does not include is any sort of direct stimulus — say, the $1200 one-time checks sent to each household endorsed by Bernie Sanders (I - Vermont), among others — and has a far smaller price tag than what the House had already passed twice, named the Heroes Act. Common sense may lead us to believe some relief is better than none, but common sense doesn’t always have a place at the congressional table.
So if there is a relief bill passed, it will likely be much less robust than many investors had been considering. It would also make very likely the need for further stimulus in 2021, prior to the considered date where every American who wants a Covid-19 vaccine will have one. Only then will we have a true semblance of our old economy back, and not before.
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