The "rotation" trade returned once more after the market was greeted with COVID vaccine news for a third consecutive Monday.
The heroes today were AstraZeneca (AZN, -1.1%) and the University of Oxford, whose trial vaccine is far easier to store than other vaccines, which could make it easier to distribute across the globe. Trial data revealed an average efficacy of about 70% against COVID – lower than competitors Pfizer (PFE)/BioNTech (BNTX) and Moderna (MRNA), hence AZN's down day – but adjusting dosages could get efficacy up to 90%.
The news prompted a massive spike in cyclical sectors such as financial stocks, up 1.9% as a sector, as well as energy plays such as Exxon Mobil (XOM, +6.6%) and Chevron (CVX, +6.1%) as U.S. crude oil futures climbed 1.5% to $43.06 per barrel. Stocks also enjoyed a bump after learning that President-elect Joe Biden may nominate former Fed chair Janet Yellen as his Treasury Secretary.
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The Dow Jones Industrial Average jumped 1.1% to 29,591, while the Nasdaq Composite gained a more subdued 0.2% to 11,880.
Other action in the stock market today:
- The small-cap Russell 2000 closed at another record high, up 1.9% to 1,818.
- The S&P 500 improved by 0.6% to S&P 500.
- Gold futures dropped 1.8% to settle at $1,837 per ounce.
Could 2020 Finish Like It Started?
Wall Street is increasingly warming to the idea that the market could rally into the new year.
"The impending roll-out of multiple highly effective COVID vaccines and the Fed's commitment to backstopping the economy give me confidence that stocks will trade higher into year-end and beyond," says Marc Chaikin, founder of quantitative investment research firm Chaikin Analytics. "I don’t believe that caution is in order and view sideways to downward price action as a buying opportunity.
"The broadening out of the advance to include small cap, value and cyclical stocks, should be accompanied by a robust year-end rally."
If you're looking to leverage value, you can do so either through individual stocks or diversified funds, while these small-cap stocks could make hay as well. The pros also expect further gains for so-called Biden stocks as challenges to his presidential victory thin away.
Another source of gains could come from an unlikely area of the market: consumer staples stocks.
The conventional wisdom goes that staples will be in for a difficult 2021 as vaccines dampen the COVID threat and Americans emerge from their houses. But some staples plays benefit just as much if not more from an outgoing American consumer, and a few others have additional edges on their side as we head into 2021. Read on as we look at some of the best consumer staples stocks for 2021.
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