S&P boasts record close with earnings reports adding to vaccine fueled
optimism
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[November 14, 2020] By
Sinéad Carew
NEW YORK (Reuters) - The S&P 500 notched a
record closing high on Friday with upbeat earnings reports helping to
drive optimism about the economy along with hopes for successful
COVID-19 vaccines, even as investors monitored a surge in virus cases
and restrictions around the country.
After a volatile trading week where the market was whipsawed between
hopes and fears around the virus, Cisco Systems Inc provided the biggest
boost to the S&P 500 after its quarterly report showed a work-from-home
driven surge in demand.
Walt Disney Co also rose as its rapidly growing streaming video
business, and a partial recovery at its theme parks tempered its
quarterly loss.
"At least for today it looks like sentiment regarding the potential for
vaccines combined with very strong earnings announcements from a number
of companies has investors hopeful that the economy can continue to
recover," said Michael Arone, chief investment strategist at State
Street Global Advisors.
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The Dow Jones Industrial Average rose 399.64 points, or 1.37%, to
29,479.81, the S&P 500 gained 48.14 points, or 1.36%, to 3,585.15 and
the Nasdaq Composite added 119.70 points, or 1.02%, to 11,829.29.
Along with the S&P, the small cap Russell 2000 also registered a record
closing high on Friday, rising 2.1% on the day.
Friday's outperformance of more economically sensitive cyclical sectors
including energy, real estate and industrials over growth sectors like
technology was a clear indication of "optimism around the economy" said
Tom Martin, senior portfolio manager at Globalt Investments in Atlanta.
The Russell 1000 value index, which is heavily weighted toward cyclical
sectors such as banks and energy, rose 1.97% on Friday while the growth
index, with a large tech company weighting, added 0.7%.
The three major U.S. stock indexes had fallen on Thursday as more than a
dozen U.S. states reported a doubling of new COVID-19 cases in the last
two weeks, with Chicago's mayor issuing a month-long stay-at-home
advisory.
But a senior adviser to President-elect Joe Biden said there were no
plans for nationwide lockdowns next year and instead talked about
restrictions for specific regions when the virus spread is bad there.
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State Street's Arone said the aversion to a full lockdown likely cheered
up some investors but that optimism may be overdone. He cited Fed
official warnings about the potential economic damage rising virus cases
could do without a fresh economic stimulus package in sight.
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Wall Street closed higher on Friday with upbeat earnings reports
helping to drive optimism about the economy along with hopes for
successful COVID-19 vaccines even as investors monitored a surge in
virus cases and restrictions around the country. Fred Katayama
reports.
![](http://archives.lincolndailynews.com/2020/Nov/14/images/ads/current/rohlfs_lda_072017.png)
"The market is underestimating some of the impact that rising cases and no
stimulus will have on the economy and earnings and they're over estimating the
potential timeline and breadth of a vaccine distribution," Arone said.
"In the spring folks were bracing for the worst and the worst didn't happen. Now
they're expecting the best and they may be a little too rosy."
Positive data from Pfizer's virus vaccine study on Monday had prompted a rally
that pushed the S&P 500 up 2.2% for the week and gave the Dow a 4% weekly gain.
The indexes also registered their biggest two-week percentage gains since April.
The tech-heavy Nasdaq, however, showed a 0.6% decline for the week as investors
booked profits in technology stocks, which have benefited from a stay-at-home
environment.
Globalt's Martin also pointed to investor hopes for news of more coronavirus
vaccine progress soon, after Moderna Inc said earlier this week that it had
enough data for a first interim analysis of its late-stage trial.
With third-quarter reports released from about 90% of S&P 500 companies
Refinitiv IBES estimates now show profits falling 7.8% from last year compared
with an Oct. 1 expectation for a 21.4% slump.
Biden solidified his victory over President Donald Trump on Friday after the
state of Georgia went his way, leaving incumbent Donald Trump little hope of
reversing the outcome through legal challenges and recounts.
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Advancing issues outnumbered declining ones on the NYSE by a 4.76-to-1 ratio; on
Nasdaq, a 2.83-to-1 ratio favored advancers.
The S&P 500 posted nine new 52-week highs and no new lows; the Nasdaq Composite
recorded 84 new highs and 11 new lows.
On U.S. exchanges 9.86 billion shares changed hands compared with the 10.1
billion average for the last 20 sessions.
(Additional reporting by Stephen Culp in New York, Medha Singh and Shivani
Kumaresan in Bengaluru; Editing by Saumyadeb Chakrabarty, Shounak Dasgupta and
Tom Brown)
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