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Pfizer vaccine news sparks $44.5 billion flood into the stock market—its biggest weekly inflow ever, says BofA

MarketWatch logo MarketWatch 11/13/2020 Mark DeCambre
© chaideer mahyuddin/Agence France-Presse/Getty Images
THE TELL

This week’s rally was prompted by euphoria about the prospects for a vaccine for COVID-19 after Pfizer and its German partner BioNTech reported that their experimental candidate was 90% effective.

That vaccine announcement on Monday sent stocks soaring, and particularly drove investors into the shares of companies that suffered from the economic fallout of the pandemic and out of those that fared better from the work-from-home trend.

Large-capitalization technology shares took it on the chin, with the Nasdaq Composite Index down 1.2% so far this week, while the small-cap focused Russell 2000 index is eyeing a weekly gain of over 1%. The Dow Jones Industrial Average and the S&P 500 index are also heading for weekly advances of 3.5% and 1.6%, respectively.


Video: Jim Cramer on how a resurgence in Covid-19 cases could affect the U.S. economy (CNBC)

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And stock investment themes like value, representing stocks that are undervalued by some metric, trounced growth stocks, or those expected to show above-average profit and revenue gains, by more than 5 percentage points, by at least one measure.

The iShares S&P 500 Value ETF is on pace for a weekly gain of 5.2%, compared against its growth counterpart, the iShares S&P 500 Growth ETF which is headed for a 0.8% loss on the week.

Hartnett and Co. recommend that investors sell the news on potential COVID-19 vaccines and therapies in the coming months and buy on the reopening of global economies in the weeks and months that follow.

”We are sellers-into-strength into vaccine in coming months…peak positioning, peak policy, peak profits likely coming months; best analog is 2018 when US tax cuts caused peak positioning, policy, and profits early that year; 2021 (vaccine) sees early peak in asset prices on higher interest rates,” the strategists wrote.

The BofA report comes as the U.S. for the first time reported more than 150,000 new coronavirus cases in a single day on Thursday, driven by record infection counts in more than a dozen states, and hospitalizations that are also at or near records in a number of areas.

That news, however, didn’t prevent this week’s equity inflows from surpassing the then-record of $43.3 billion that was put into equities in March of 2018 as investors shrugged off risks around the international trade war with China started by President Donald Trump.  

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