(Bloomberg) — Much-maligned value stocks are surging after a potential breakthrough in the race for a Covid-19 vaccine ignited a global risk-asset rally.
The Russell 1000 Value Index rocketed 5.7% higher on Monday, the most since early April, after a large-scale study of the Covid-19 vaccine being developed by Pfizer Inc. and BioNTech SE showed it prevented more than 90% of infections. That cohort is outperforming the tech-heavy Nasdaq 100 Index by the most since 2008 as the stay-at-home trade stumbled, led by a plunge in Peloton, Netflix and Zoom.
It’s a potential reversal of fortunes for value stocks — those that look cheap relative to fundamentals — which have been battered this year as coronavirus lockdowns descended around the globe. These restrictions favored super-sized tech companies, with investors wagering that the likes of Amazon.com Inc. and Apple Inc. were best poised to weather the pandemic. However, the possibility of an effective vaccine could be the catalyst needed for a leadership rotation in equity markets.
“If you layer in this news on a vaccine, I think you still start to see this leadership rotation from growth and technology into value and cyclical,” said Jeff Mills, chief investment officer for Bryn Mawr Trust. “This news is going to be important for the leadership backdrop of the market.”
The value strategy’s comeback has eluded investors for years. The Russell 1000 Value Index is still down about 4.8% this year, while the Nasdaq 100 is still over 40% higher year-to-date. Financial shares — the largest weighting in the Russell value index — have been crushed by low interest rates and a still-flat yield curve.
However, a broad selloff in Treasuries on Monday boosted bank stocks by the most since March. Meanwhile, shares of airline and cruise companies surged amid budding optimism over the economy’s eventual reopening. And the small-cap Russell 2000 Index climbed as much as 6.2% for its best day since May.
“That will, in fact, light a fire under the rotation out of what has been working — megacap technology and health care names — and into economically sensitive cyclicals,” Arthur Hogan, chief market strategist at National Securities Corp., said by phone. “We’ve seen fits and starts of that rotation over the course of the last couple of months but clearly needed news on the vaccine front to really start that in earnest.”
Former Vice President Biden has a detailed proposal that involves raising taxes on people with taxable income of more than $400,000—essentially targeting the top 1%. President Trump wants to keep the tax cuts that went into effect in 2018, which largely benefited top earners.
Stocks sailed to record highs Monday morning as traders took in promising data on a leading COVID-19 vaccine candidate as well as President-elect Joe Biden’s victory in the U.S. presidential election, ending a days-long nail-biter over which candidate would prevail in winning the White House.
A victory by Democratic presidential candidate Joe Biden in the November election could significantly change tax bills for a slew of Americans. Here’s what you need to know.
Nio Inc. got a bullish endorsement from J.P. Morgan analyst Rebecca Wen, as she raised her stock price target on the belief the Shanghai-based company will be a “winner” in the electric vehicle market.
Workhorse kicked off earnings from electric car stocks. But Workhorse stock fell as it gave weak fourth-quarter production guidance. Nikola is due.
Of course, retirement security was on some legislators’ minds before the election. The Ways and Means Committee introduced bipartisan legislation last month called the Securing a Strong Retirement Act of 2020, which builds upon the Secure Act passed in December.
The Dow Jones Industrial Average is soaring after (PFE)announced that its Covid-19 vaccine has a 90% efficacy rate. The Dow is up 1,199.89 points, or around 4.2%, following the announcement. The S&P 500 has also gained about 2.9% points, while the Nasdaq Composite has risen 0.7% as stay-at-home stocks get hit.
Warren Buffett jumped back into the stock market again in Q3, after net selling in Q2, and spent a record amount buying back Berkshire Hathaway shares.
Getting positive news on the COVID-19 front is essential to maintaining the stock market’s post-election rally, Goldman Sachs believes.
As pension plans fade, today’s investors may want to look to annuities to bridge the retirement gap, one expert said.
The energy sector is booming, but refiners might be the first to see the good news impact their business.
Zoom Video stock plunged on Monday amid positive coronavirus vaccine news from Pfizer. Shares in Zoom Video had soared some 635% in 2020 as businesses told employees to work from home.
Shares of technology stocks that saw big benefits from stay-at-home trends due to the pandemic are falling in morning trading Monday given upbeat vaccine news from Pfizer Inc. and BioNTech SE.
Tesla trailed local Chinese players in a hot Chinese market for electric cars. But Tesla stock rose early Monday as it works on abuy point.
Dow futures soared as a Pfizer/BioNTech coronavirus vaccine is over 90% effective. But tech futures slashed gains.
Shares of airline companies blasted off Monday, after upbeat news on a potential COVID-19 vaccine candidate from Pfizer Inc. and BioNTech SE gave investors hope for a quick recovery in business and leisure travel.
(Bloomberg) — Wall Street has made its peace with a Joe Biden victory, taking comfort in his decades-long political career in which moderation is a prevailing trait. But it’s nervous about his more liberal allies.Finance executives will be closely watching how Biden handles the coming internal Democratic fight between centrists and progressives that threatens to increase regulation and dent profits.Firms are counting on his business-friendly inner circle — a group that includes long-time Democratic stategists, corporate lawyers and former lobbyists — to exert the most influence in selecting nominees for agencies like the Treasury Department and the Securities and Exchange Commission that manage the economy and police the markets. Middle-of-the-road candidates have a key advantage: They’ll have a much easier path to confirmation in a Senate that appears likely to remain in Republican hands.Yet liberal Democrats, inspired by Senator Elizabeth Warren’s focus on wealth inequality and distrust of big banks, are intent on getting like-minded officials into those jobs. They argue that in a Democratic administration, the president must pick regulators with strong records of prioritizing average Americans over financial titans.“Personnel is policy,” and progressives have come into the fight “armed with a bazooka,” said Stephen Myrow, managing partner of Beacon Policy Advisors, a Washington-based firm that tracks regulatory and legislative proposals. “You will certainly see some re-regulation.”Hanging in the balance could be the reach of post-crisis rules that were eased during the Trump administration. Over the past four years, adjustments to complex requirements like capital levels, collateral for derivatives trades and brokers’ legal responsibilities have saved banks tens of billions of dollars. Firms are also concerned there will be a fresh focus on investigations, a clampdown on executive pay and that regulators will be slow to lift restrictions on dividends and share buybacks that were implemented due to the pandemic.Biden has already tapped former Commodity Futures Trading Commission Chairman Gary Gensler and KeyBank NA executive Don Graves to examine financial regulatory agencies as part of the presidential transition, according to a person familiar with the matter. Gensler’s role should appease progressives, as he gained a reputation for standing up to Wall Street during President Barack Obama’s administration. Conversely, the involvement of a long-time banker like Graves will probably reassure financial firms.Though banks, private equity firms and hedge funds mostly escaped the spotlight during a presidential campaign dominated by coronavirus, their top managers and Washington lobbyists — many of whom donated to Biden’s run — are now emerging from the shadows to offer lists of preferred agency chiefs.In a nod to Biden’s pledge to have a diverse administration, their candidates include women and people of color who have experience at investment firms. A number, too, have worked under Obama, making them a known quantity to Wall Street.The progressives, however, say they plan to draw the line at regulators in the vein of Robert Rubin, Timothy Geithner or Lawrence Summers. The activists have also been busy doing opposition research, paying particular attention to employees at private equity firms and asset manager BlackRock Inc., which they contend holds too much sway in Washington. Progressives say they plan to oppose most industry-connected candidates, even for lower-level jobs.Still, with the chances of Democrats taking the Senate looking challenging, the financial industry might dodge some of the most arduous measures that Washington could have thrown at them. That includes higher corporate taxes, new levies on stock trading and high-profile Senate hearings where CEOs would face a barrage of uncomfortable questions.Along with the slate of new agency chiefs, the Biden victory will impact financial companies large and small in numerous ways. What follows is a look at several agencies and policy areas that will be on the front burner as the Biden administration begins in January.New Constraints on Pay?More than a decade since Congress passed the Dodd-Frank Act, there’s still a major requirement that’s never been finished: a mandate that financial regulators implement constraints on executive pay at banks, brokerages, asset managers and other firms. The purpose is to rein in compensation practices that encouraged the kind of excessive risk-taking that caused the 2008 financial crisis. But regulators have proposed rules multiple times without ever settling on an approach.While firms sought to get out in front of the rules by beefing up their own policies for clawing back bonuses and withholding deferred pay, watchdogs appointed by Biden could mandate requirements that are much tougher that those that companies have adopted.A Private Equity Reckoning?It’s no secret that private equity firms are No. 1 on the Democrats’ hit list for the finance industry. The lightly regulated investment companies are sure to face policy fights that could impact their business model, as well as the companies they own.Democrats’ goal of imposing new taxes on buyout firms will face headwinds in the Senate. But it’s possible eliminating the carried interest loophole, which allows partners’ profits to be taxed at a lower capital gains rate rather than as income, could draw bipartisan support. Other tax targets that might imperil the industry, such as limiting the deductibility of the debt that is often piled on corporate acquisitions, seem doubtful.Even without Congress, Biden’s regulators are expected to step up scrutiny of private equity and could issue new rules. Though some Trump holdovers could slow the process, the industry is likely to be reviewed by the Financial Stability Oversight Council, the powerful group of regulators led by the Treasury secretary. FSOC can put firms under Federal Reserve supervision or regulate industry practices that it deems potentially unsafe.Lastly, Democrats in the House may turn to a “name-and-shame” agenda, by holding hearings and conducting investigations to highlight issues like bankruptcies of portfolio companies or the industry’s more controversial investments in health-care and private prisons.A Reprieve on Taxes?Trump’s 2017 tax cuts have been particularly beneficial for banks. Their effective rates used to be higher than those paid by non-financial companies and had more room to fall.Biden has proposed an increase to the corporate rate that could result in the six biggest U.S. banks paying an additional $9 billion in 2021, and much more in future years as their earnings recover from the pandemic. But it’s hard to see Republican senators supporting a tax hike.A Reinvigorated CFPB?Wall Street has already ceded the Consumer Financial Protection Bureau to the progressives, who want Warren’s brainchild to get much tougher than it has in the Trump years in policing mortgages, credit cards and other products. Warren herself is sure to play a role in picking its next director and one potential candidate is U.S. Representative Katie Porter of California, an acolyte of the Massachusetts senator.Banks are hoping that if a more liberal appointee is confirmed to run the CFPB, Biden may gain flexibility to pick moderates to take the helms of the Treasury Department, the Fed and the SEC.Still, the CFPB won’t have a light-touch agenda like it did under Trump, when the agency’s budget was closely scrutinized and it focused on smaller payday lenders, mortgage firms and auto loan companies. Big banks are likely to get more attention, along with new rules and sanctions. That includes an expected effort to rein in overdraft fees – which bring lenders some $11 billion annually.A Muscle-Flexing FSOC?In the Trump era, FSOC strayed from its envisioned role of trying to spot risks that could cause another financial panic, focusing instead on ways to cut rules. Most think that will quickly change under Biden.Its powers include the authority to designate a company “systemically important,” which puts firms under heightened Fed supervision. The council can also do the same for products or practices it believes are too risky, such as money market funds or securities lending. In addition, FSOC sets key oversight priorities. Biden’s regulators will be able to fill six of the 10 voting seats. Still, four Trump appointees, including the Fed chairman, will retain their jobs and can stay on for at least a year — meaning any change may not come fast.A Tougher SEC?No watchdog matters more to Wall Street’s vaunted investment banks than the SEC, which will be at the center of the fight between progressive Democrats and moderates over the direction of financial regulation in the next four years.Liberals would like to see former SEC Commissioner Kara Stein return to the agency as chairman. She is a vocal industry critic, who during her SEC tenure blasted bank fines as too weak and repeatedly questioned whether the agency should have placed more restrictions on products like leveraged exchange traded funds. Candidates favored by moderates include former SEC Commissioner Robert Jackson Jr. and Georgetown Law Professor Chris Brummer, who would be the first African American chairman.Pain for Regional Banks?Regional lenders such as U.S. Bancorp, PNC Financial Services Group Inc. and Truist Financial Corp. are among those that have benefited most from the Trump administration, with regulators tailoring rules so that Wall Street banks got the toughest oversight. Biden appointees could revisit those rollbacks, though some Democratic lawmakers backed the relief that mid-sized lenders got under Trump. New watchdogs and Democrats might also exert more scrutiny on potential mergers involving regional banks. Such lenders, however, can count on GOP allies in the Senate to help fend off attacks.(Updates with transition officials in seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Stock markets worldwide are soaring on news that a vaccine candidate is 90% effective at preventing COVID-19, and could start coming to market in a matter of months. This is upending the stock market, sending futures shares shooting higher in pre-market trading. Indeed, shares of airlines and cruise companies are coming up like Lazarus, the value of some formerly-favored concerns like Zoom and Peloton are down sharply this morning.
On CNBC’s “Mad Money Lightning Round,” Jim Cramer said he would pick First Solar Inc. (NASDAQ: FSLR) over Solaredge Technologies Inc. (NASDAQ: SEDG).Plantronics Inc. (NYSE: PLT) is a good company and a very high quality stock, he said. He prefers lower-end companies, more gaming oriented, but he doesn’t want to go against the call and he thinks Plantronics is a good one.Workhorse Group Inc. (NASDAQ: WKHS) is a bit of a showhorse for Cramer. If he wanted an EV stock, he would buy Plug Power Inc. (NASDAQ: PLUG).Instead of Moneygram International Inc. (NASDAQ: MGI), Jim Cramer would buy Paypal Holdings Inc. (NASDAQ: PYPL) because it is going all in with crypto.Fortinet Inc. (NASDAQ: FTNT) is okay, Cramer said. He prefers Palo Alto Networks Inc. (NYSE: PANW) and Crowdstrike Holdings Inc. (NASDAQ: CRWD). Cramer is pounding the table to buy Alibaba Group Holding Ltd. (NYSE: BABA).Trupanion Inc. (NASDAQ: TRUP) also is good, Cramer said — he thinks we need pet insurance.See more from Benzinga * Click here for options trades from Benzinga * Carter Worth And Mike Khouw See SLV Moving Higher * Tony Zhang Sees Bullish Sign For American Water Works(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Walt Disney, McDonald’s, Beyond Meat, DraftKings, Softbank, DraftKings, and more companies report third-quarter results. Plus, October jobs numbers, a FOMC meeting, and election day.
Stock, Investment, Vaccine, Stock market
World news – US – Ridiculed Value-Stock Bets Look Brilliant on Vaccine News