COVID-19 vaccine hope lifts American small cap stocks to record
The Russell 2000 is roaring back
America’s small, but mighty companies, are on the upswing as investors prepare for the arrival of a COVID-19 vaccine.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| IWM | ISHARES TRUST RUSSELL 2000 ETF | 234.44 | +3.51 | +1.52% |
The Russell 2000, whose companies do most of their business in the U.S., hit a record Friday hitting levels not seen since August of 2018. The gains, partly coming as money rotates out of tech, amount to over 13% this month alone.
For the year, small caps -- companies with $300 million to $2 billion in market capitalization -- have gained 4% lagging their larger S&P 500 cousins which have rallied 10.6%.
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“Small stocks doing better than big stocks, cyclical stocks doing better than defensive stocks, value outperforming growth,” noted Nuveen chief equity strategist Bob Doll to FOX Business. “We are seeing some change in leadership that might have some legs,” he added.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| SPY | SPDR S&P 500 ETF TRUST - USD DIS | 593.59 | +3.06 | +0.52% |
Those “legs” Doll refers to may be driven by the arrival of a coronavirus vaccine by year-end. Earlier this week, Pfizer and BioNTech disclosed that their vaccine was 90% effective in preventing COVID, based on early trial data. Eli Lilly is also making progress.
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Additionally, BioNTech's CEO CEO Ugur Sahin told FOX Business on Thursday, the vaccine may have longevity for up to a year with the potential to " reimmunize" following.
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| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| PFE | PFIZER INC. | 25.14 | +0.19 | +0.76% |
| BNTX | BIONTECH SE | 108.23 | +6.09 | +5.96% |
Economists, including Moody’s John Lonski, say a vaccine is a game-changer for economic growth that has been trampled by the pandemic.
“If we have an effective vaccine by early next year, then it’s probably assured real GDP is going to grow by 4.5% in 2021,” he told FOX Business.
While the most recent GDP read for the 3Q jumped a record 33.1%, it followed a drop of 31.4%, the worst in history. As for fourth-quarter forecasts of a rise of 3.5%, is expected.
Businesses including restaurants, shopping malls, commercial real estate, hotels, and airlines need to see consumer demand snap-back which is not likely until a vaccine is approved and delivered to the general public.