Today, we got a glimpse of what a light at the end of the tunnel might look like.
A cloud of uncertainty was removed with the proclaimed election outcome this weekend, setting a positive tone for the market this morning. Then, Pfizer gave the market an extra shot in the arm, reporting better-than-expected preliminary results from its COVID vaccine trial. The S&P 500 reached a new intraday record high.
Pfizer’s preliminary success is a promising sign for the future, and stocks are ultimately forward-looking. With a viable vaccine apparently on the horizon, it may be time to take a second look at your portfolio.
Stocks that could benefit from a return to normal life – or the “reopening trade” — could be worth watching over the coming weeks. We got a dose of it today, with airlines and cruise liners climbing as much as 20%. Energy stocks rose the most among S&P 500 sectors, jumping 15%. As we’ve said for a few months now, it may be time to add some value or cyclical stocks that could shine as the economy improves.
On the other hand, the “stay at home” trade, which has led the market higher for most of this year, may be falling out of favor. The FAANG stocks – Facebook, Amazon, Apple, Netflix and Alphabet (Google) – fell more than 1% today. There’s still a good long-term case for tech, but it may not outpace the rest of the market like it has since March.
Don’t get too carried away, though. There are risks to every rally. And while we believe the vaccine news is a huge positive for the market, there are a lot of unanswered questions. One of those questions is how long it’ll take a vaccine to become available to the masses. We could still be months from the end of the pandemic, and U.S. COVID cases are surging.
There’s a lot to take in, and we’re still waiting to see how the recovery evolves and the consumer behaves in the upcoming months. But a vaccine could be a game-changer for the market, and we’re taking big steps in that direction.
Check out this video from Lindsey Bell, chief investment strategist at Ally Invest, for more thoughts on what to expect.
Lindsey Bell is Ally’s Chief Investment Strategist, responsible for shaping the company’s point of view on investing and the global markets. She is also President of Ally Invest Advisors, responsible for its robo-advisory offerings. Lindsey has a broad background in finance, with experience on the buy-side and sell-side, in research and in investment banking and has held roles at JPMorgan, Deutsche Bank, Jefferies, and CFRA Research.
Lindsey holds a passion for teaching individuals how to become successful long-term investors. She is a contributor at CNBC, and frequently shares her insights with various publications including the Wall Street Journal, Barron’s, MarketWatch, BusinessInsider, etc. She also serves on the board of Better Investing, a non-profit organization focused on investment education.
The opinions expressed here are not meant to be used as investing advice. For more information, visit our website.