Markets React Sharply to Good and Bad News Related to Potential Vaccine

Posted in , By David M. Smith

The markets went for a little roller coaster ride this week.  It started with a Boston company, Moderna, releasing interim positive results from its first human COVID-19 vaccine trial. It stated there were no issues with participants producing antibodies needed for an immune response and they tolerated the vaccine well.  WCVB  As expected, the markets reacted positively with stocks gaining sharply and analysts believing a vaccine could start being available by year-end.  Morningstar  The next day stocks dropped sharply as skeptics stated not enough data was released for outside rigorous analysis and questioned some assumptions in the press release.  Statnews  By Wednesday, stocks were reacting to economic data and bounced back.  CNBC

The volatility in stocks this week is the new normal for investors.  Any good or bad news regarding containing the virus or finding a vaccine will have an outsized effect on the investment markets.  Until there is clarity regarding the containment of the virus or a vaccination, market volatility will continue. 

  • Planning for a Vaccine:  The first human trials for vaccines are wrapping up and plans are starting to unfold as to which countries and workers receive it first.  Healthcare workers and those in essential services will be at the front of the line, but it gets a little trickier after that, including which government agencies are involved in mass dissemination.  WSJ
  • Thoughts From the Fed:  Minutes from last month's Fed meeting were released giving us an inside look at their thoughts, concerns, and potential actions.  They intend to keep short-term interest rates near zero until inflation gets closer to 2% and employment is back to where it was before the virus.  They also stated they didn't favor negative rates.  WSJ
  • Results of Universal Basic Income Experiment:  In 2017-2018, Finland carried out a universal basic income experiment.  It was the world's first national randomized experiment in which recipients were given a monthly tax-free income of about $600 regardless of any other income earned.  The analysis of the results indicates the recipients had better perceived mental well being, felt more economic security, with only a small effect on employment.  Kela
  • Quick Hit Articles for the Week:
    • Why video calls are dissatisfying (hint: audio interfering with speaking): The Economist
    • But Zoom is now worth more than the world's seven largest airlines: Visual Capitalist
    • A compelling story of a virologist who caught Covid-19 and barely lived: Science Mag
    • The FBI issued a warning that hackers from China are targeting U.S. drugmakers working on vaccines: CNBC
    • The prosperous Italian area hard hit by the virus starts to reopen with a heavy heart: WSJ
    • Is the virus accelerating China as a superpower at America's expense? The Economist
    • China may be having its "OK, Boomer" moment: NYT
  • Retail Sales Strong for Some Retail Stores:  Retailers Lowes and Target reported strong revenue growth this week.  Many analysts were optimistic that the results showed retailers can adapt to the pandemic even if there are additional costs to do so.  MarketWatch  WSJ
  • Environmental Good News:  Every day in April, more renewable energy was produced daily than was from coal.  That was a first for any month.  Also last month, a mutant bacterial enzyme was discovered that can break down plastic bottles in a few hours and the byproduct can be used to make new bottles.  The process is also 25 times cheaper than making new bottles from oil.  April was a good month for the environment!  Good News Network  Futurism
  • Italian Again Tonight?  I often find myself making pasta multiple nights a week.  It's easy, it's delicious, it's hot, and I can't resist a spicy red sauce with parmesan over linguine, spaghetti, or ziti.  So, I started looking for another go-to meal and found multiple sauce recipes that go with gnocchi.  That's different enough from pasta, right?  NYT

Thank you for reading The Friday Buzz.  Please give feedback regarding the newsletter and forward it to anyone who may enjoy the articles.  Have a nice weekend.  Be well and stay safe!

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About the Author David M. Smith

David is a Senior Financial Advisor and the firm’s Co-Chief Investment Officer. He has more than 20 years’ experience in the financial services industry and holds the highly respected Certified Investment Management Analyst™ and Certified Financial Planner™ designations; he is a Co-Managing Member of the firm.
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