The S&P 500 continued higher marking its third consecutive week of gains and reached intraday levels not seen since the market sell-off began in late February; at its Wednesday peak, the index was also briefly in positive territory for the year. Outperformance of smaller-cap stocks, which have considerably lagged in recent months is also an encouraging sign.
Earnings season starts. The week marked the unofficial start of what is likely to be the ugliest earnings season in recent memory. Several major banks reported steep drops in profits as they set aside billions of dollars in anticipation of writing down bad loans. Analysts expect overall profits for the S&P 500 to contract 44% in the quarter relative to a year before—if confirmed, it would be the worst performance since the 69% earnings drop amid the financial crisis in the final quarter of 2008.
Early vaccine trials are fueling hope. Wall Street opened the week with worries about the resurgence of the coronavirus across much of the U.S.. Midweek positive vaccine data sparked optimism. Tuesday, Moderna Therapeutics announced that its vaccine had produced high levels of antibodies in all test participants in an initial safety trial. On Wednesday, Oxford University researchers announced that their vaccine candidate through AstraZeneca, had produced not only antibodies in participants, but also “killer” T-cells that may offer prolonged immunity. Both vaccine candidates are receiving support from the U.S. government’s “Operation Warp Speed” program, which means the vaccines may be available in limited quantities as early as the fall if further test results are positive. The positive news prompted Dr. Fauci, to say he believes the U.S. will meet its goal of having a coronavirus vaccine by year-end.
Finally, the term resilient is often used to describe the comeback we are experiencing in the market. Resilience is a universally admired trait. We use catchphrases like “New York Tough” as a rallying cry to get through tough times like the ones we are experiencing today. Yesterday, the world lost two of its best examples of real life resilience with the passing of C.T. Vivian and John Lewis. I will close with a quote from C.T. Vivian:
“Leadership is found in the action to defeat that which would defeat you.”
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