Why COVID-19 whiplash won’t last and the S&P 500 will be 13% higher by June, from UBS
By Barbara Kollmeyer
Critical information for the U.S. trading dayGetty Images
Not for the faint of heart.
Stock futures are pointing to a bounce after Wednesday’s meltdown. And investors feeling whiplash from second-wave COVID-19 alarm bells will have to steel their nerves again for a huge earnings day, as the big technology guns get ready to report after the close — Apple AAPL, Amazon.com AMZN, Alphabet’s Google GOOGL, and Facebook FB.
With the U.S. election only five days away and plenty of worries about how that nation’s pandemic fight will shape up in light of what is happening in Europe, some palpitations right now are justifiable.
But our call of the day from a team of strategists at UBS, led by chief investment officer Mark Haefele, urges investors to hold steady against swirling COVID headlines, as the team predicts a “short-lived” setback for equities.
“We continue to see upside over the medium term, and target 3,700 on the S&P 500 by June 2021, around 13% higher than today’s levels,” Haefele and the team said, in a note to clients.
“While local restrictions to control the pandemic will be a drag on growth, we see several reasons to expect the effect is likely to be more limited in the first half of the year,” he said.
The UBS strategists believe that with 10 vaccine possibilities in late-stage trials around the world, governments will be able to start easing up restrictions by the second quarter of next year. That will help corporate results “recover to pre-pandemic levels by around the end of 2021.”
Stock futures ES00YM00NQ00 are rising after the S&P 500’s SPX worst day since June. European stocks XX:SXXP are struggling after hitting five-month lows. Asia had a rough session. And oil prices CL.1BRN00 are dropping again:
Results from beer giant Molson Coors TAPare boosting those shares. Drugmaker Moderna MRNAswung to a loss, but the stock is up. Earnings from food groups Kraft-Heinz KHC and Kellogg K are still to come. Also reporting after the close will be social-media group Twitter TWTR and coffee giant Starbucks SBUX.
From Europe, shares of Finnish handset maker Nokia NOK are slumping on lowered guidance. Shares of social media group Pinterest PINS are surging after blowout results.
The European Central Bank announces its policy decision at 8:45 a.m. ET, with a press conference 45 minutes later. But the central bank may not take action until next month.
Third-quarter U.S. gross domestic product probably surged 30%-plus, but won’t tell us much about what is going on now. Also ahead, weekly jobless claims and pending home sales.
Drugmaker Regeneron REGN said its experimental antibody cocktail “significantly reduced” COVID-19 levels and the need for more hospitalizations and emergency-room visits.