The Close: Lockdown Fears Push Markets Lower.
One thing that all Americans, and other inhabitants of the world, can agree on is that we never want to go back into lockdown again. Yet, the market is pricing in a potential second lockdown, when Biden gets in office. Stocks had begun high in the early trading hours, due to vaccine rollout news, but ended much lower as fears of a second shutdown have arisen. What can we look forward to as the year closes? Have stimulus talks progressed yet? Have they stalled? Have they remained constant? We’ll find out in this blog.
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The Dow was down -0.62%, down 185 points. The Dow and the S&P 500 faltered today, again, yet the Nasdaq was up again. The S&P 500 was down 16 points, sinking by -0.44%. The Nasdaq was up 62 points, rising by +0.50%. Why is the Nasdaq typically higher than the other two major indexes? Well, the Nasdaq comprises a vast majority of tech stocks, and we have seen quite a boom in the tech sector this year, some would call it a “tech bubble”, yet I disagree. This year, we have seen the need for tech companies increase by a much more substantial level than ever before, whether it be using Zoom, or other sites. Zoom, which has seen one of the largest increases in a single year, obviously, is up by a massive amount. Zoom, $ZM, is up +483.50% YTD. The company opened the year trading at $68.72, and is now worth almost $400 per share, at $395.99. Other than Zoom, another bug tech name in the Nasdaq is Tesla. Tesla, $TSLA, is currently trading at $639.83, which is their level after the 7:1 stock split. It’s 52 week range is between $72.10-$654.32. The 1 year target price for Tesla is $389.79. The company has posted various YTD gains in their revenue, net income, which is their first positive year in the last 4 years, and has beaten their EPS expectation every quarter so far this year.
What’s come of the stimulus talks? They haven’t had much progress in congress or the senate, in fact, analysts predict we may not see stimulus aid until next year. This isn’t what kept the market down today, though. The market was down simply due to lockdown fears. The economy, as seen in our first lockdown, cannot sustain these economic lockdowns. Small businesses can’t possibly succeed in this environment, thus businesses are not necessarily being created at the rates they usually are, simply because there is no incentive to open one. Why open a business when you know there’s a high chance it closes down for good? While we have gotten great vaccine news recently, we’ll see if the markets continue to falter within the coming days, and weeks.