The S&P 500 index of blue-chip US stocks, considered a benchmark for the health of US companies, rose 2% for the week to Friday, its best weekly performance in four and a half months and its third consecutive week registering a new all-time high.
The index was led higher by companies battered during the coronavirus pandemic such as airlines, cruise lines and casinos, following Pfizer’s announcement that its antiviral pill was able to reduce by 90% hospitalization rates linked to Covid-19.
Evidence that the US economy is pulling out of the pandemic-induced slowdown further bolstered sentiment, with the latest jobs report showing a resumption of job growth in almost all sectors after several months of duller gains . More than 500,000 new jobs were created in October and the unemployment rate fell to 4.6%, a move that exceeded economists’ expectations.
“We’re getting back to normal,” said Kristina Hooper, chief global markets strategist at Invesco. “We are not there yet, but we are certainly moving in the right direction. Growth is re-accelerating and it is being helped by new developments in Covid treatment. “
Scott Gottlieb, former commissioner of the Food and Drug Administration and member of the Pfizer board of directors, said on Friday the pandemic could be over by January.
Pfizer’s announcement added to Merck’s results Thursday that its own pill reduced hospitalizations by 50%.
Live Nation Entertainment, which hosts live concerts that were curtailed by social restrictions during the pandemic, rose more than 20% for the week, the biggest increase since March 2020, when the Fed entered for the first time in financial markets to quell the downturn resulting from the pandemic. Cruise line Royal Caribbean was also among the top contributors for the week, up more than 14%.
“We have entered a new phase of the pandemic,” said Rebecca Patterson, director of investment research at Bridgewater, adding that the rise in equity markets was supported by cautious comments from central banks this week.
On Wednesday, the Federal Reserve took its first big step towards ending the support given to financial markets by the pandemic crisis.
The US central bank has announced that it will start cutting its asset purchase program by $ 120 billion per month with the aim of ending the stimulus by the second half of next year.
The move came as no surprise to investors, who waited for advice for months as deliberations among Fed officials dragged on.
Assurance from Fed Chairman Jay Powell that the central bank is taking a patient approach to raising interest rates has also helped ease investor angst over a significant move towards higher borrowing costs.
“He’s doing everything he can to avoid confusion,” Hooper said.
Additional reporting by Nicholas Megaw and Kate Duguid