The Top MarketBites Investment Stories for September 24th, 2020
Futures indicate a flat open market despite Wednesday loss.
A wave of trading patterns and small news stories continued driving stocks down. Tech giants such as Apple, Amazon, and Alphabet, that lead the S&P 500 to new highs throughout the summer, have all seen consecutive down days to start this week. Senior Portfolio Manager with Columbia Threadneedle Pete Santoro commented on the sell-off: “Some of these names have risen so far so fast. I think that people have to start doing the work and saying, ‘Does it make sense for these companies to be trading so strong?'”.
Tesla has been another large mover as of late. Most recently negative, as CEO Elon Musk announced that reductions in battery costs could take as long as three years. The news foreshadows difficulty in increasing production and widespread adaption for electric vehicles.
Testifying in front of U.S. Congress on Wednesday, Fed Chairman Jerome Powell reiterated that continued government spending would allow the economy to reach a favourable 2% inflation rate and a healthier labor market. This news is important as a recent spending bill was passed to avoid a potential shutdown in the coming week. We still await news on a potential second stimulus package.
TOP STORY 1: JPMorgan expected to reach settlement over spoofing investigation
JPMorgan is expected to reach a deal with various branches of the U.S. Government to pay nearly $1B over Treasury and precious metals “spoofing” allegations.
Spoofing is the practice of sophisticated traders flooding the market with orders that they have no intention of executing. Often shifting prices as demand is inaccurately reflected.
This would be a record penalty for spoofing, which was banned and has been heavily policed after the 2008 financial crisis. The deal is important to JPMorgan, as the investigation and penalties will not extend to other parts of their business, and will not result in further restrictions of business operations for the firm.
Although they must admit wrongdoing and pay a record fine for their actions, it appears that JPMorgan is being viewed as a relative winner in this deal. Multiple Managing Directors and Executives have been charged criminally as a result of this investigation.
TOP STORY 2: Are we closing in on normalcy?
Why does this matter?
In the fight to take control of the COVID-19 pandemic, we officially have multiple players in contention for producing the first widely available vaccine. Recent reports have suggested that Pfizer and Moderna are further along than J&J, with results of their final stage trial expected as early as mid-October. J&J is expected to have their results in by early 2021, with the expectation of being able to deliver over 100M doses of the vaccine should it pass. J&J is also testing a two-dose, multi-treatment vaccine with the U.K. Government.
The optimist will say that perhaps we are approaching the light at the end of the tunnel in the search for a vaccine. It should be noted that entering Phase 3 is not a guarantee to approval, despite the desperation of government officials. Watch both J&J and Pfizer closely as their results come in on their respective trials.