The Market Today
Optimism as FDA Grants Emergency Use for Plasma Treatment
by Craig Dismuke, Dudley Carter
VS Coronavirus Chartbook (PDF) (Link) (Updated by 10:00 a.m. CT)
Vining Sparks MarketWatch Video (CLICK HERE)
Chicago Fed Index Continues to Show Volatility: The only report on today’s economic calendar is the Chicago Fed’s National Activity Index which disappointed expectations by falling from +5.33 to +1.18. The index continues to show a great amount of volatility and is less informative as an indicator of economic pressure than normal.
Stocks Stay Strong to Start the Week: Last Friday’s positive momentum that propelled the S&P 500 to its second record high of the week, which was the first since February, carried over into Monday’s global trading. Global stocks shot higher to start the week after President Trump announced that the FDA had granted an EUA, or emergency use authorization, for convalescent blood plasma treatment for the virus. The treatment uses blood plasma from those who’ve recovered from the virus to treat critically ill patients, a procedure the administration said reduces mortality by 35%. Also making headlines, there were reports that the White House was considering fast-tracking AstraZeneca’s vaccine for approval in the U.S.
Treasury Yields Quiet as U.S. Equities Prepare to Open at a Record: Stocks in Asia rose 0.8%, a positive trend that has continued to build across Europe to lift the Stoxx 600 by 1.9% at 7:15 a.m. CT. Shares of AstraZeneca, a company headquartered in the U.K., were up more than 4%. However, energy companies were leading the gains in Europe as oil prices rose more than 1% amid the risk-on mood. The solid gains globally lifted U.S. futures which, at 7:20 a.m. CT, were pointing to new records for the S&P 500 and Nasdaq when the opening bell rings. The S&P 500 was up 0.9% but trailing modestly larger gains for both the Dow and Nasdaq. Treasury yields, however, had only inched higher as uncertainty about the virus persists. While the virus situation has continued to improve stateside, cases are climbing across Europe and stirring concerns about a slowdown in the recovery there. The 10-year yield was 0.3 bps higher at 7:20 a.m. CT.
ICYMI – August 21, 2020 Weekly Market Recap: The Fed’s Minutes disappointed investors who were hoping officials would shed more light on the conclusion of their long-running framework review and its implications for monetary policy and interest rates moving forward. While yields jumped Wednesday afternoon on the lack of clarity, the broader trend was downward. Multiple reports showed housing’s incredible and unflappable V-shaped recovery has continued despite a record jump in delinquencies in the second quarter. However, there were mixed signals about the trend and trajectory of the broader economy. A couple of regional Fed surveys slowed again in August after declining in July and jobless claims rose unexpectedly back above 1 million. On the other hand, preliminary Markit PMIs for August were stronger than expected, signaling activity has picked up this month. Despite the uncertainty, the S&P 500 finally eclipsed February’s all-time high after its strongest 103-day run since the 1930s. The 10-year yield, however, dropped 8 bps after jumping 15 bps the week before on record Treasury supply. Click here to view the full recap.