Week of December 21, 2020

The global equity markets begin the holiday-shortened trading week sharply to the downside – U.S. equity bond markets close early Thursday for Christmas-eve and are closed Friday in observance of Christmas.  Early this morning, news of a highly contagious new strain of the coronavirus in the U.K. has triggered more severe lockdowns and travel restrictions across Europe.  In pre-market trading, the Dow Jones Industrial Average was down as much as 400 points.  Most affected sectors are showing to be the airlines, cruise lines and hotel stocks.

“People are bracing themselves for a challenging start to 2021,” said Brian O’Reilly, head of market strategy for Mediolanum International Funds.  “Stocks could potentially pull back for the rest of the year in quiet trading, and data such as restaurant bookings suggest economic activity is already slowing in the U.S.”

Moderna’s COVID vaccine received emergency FDA approval late last week and shipments began over last weekend.  Health-care workers and residents and staff at nursing home were the first in line to receive the vaccine.  According to the CDC, next in line are first responders, teachers, postal workers, and grocery store workers.  With Pfizer’s vaccine already being distributed, Moderna is hoping to produce and distribute millions more doses by the first week of January.

U.S. stocks are being hit today despite that an agreement has been reached by lawmakers for a fiscal relief package in hopes to ease the pressure on the consumer and the economy.  The nearly $900 billion aid package is intended to support consumer conception in the coming months.  “It is more of an antidepressant than a stimulus,” said Paul Donovan, chief economist at UBS Global Wealth Management. “The uncertainty here is to what extent are the $600 checks sent, and to what extent does an extra $300 a week unemployment benefits mitigate fear of unemployment for those who have jobs.