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Stock Market Today: November 19, 2021

Stock Market Today: November 19, 2021

Robert Mitkowski | 11/19/2021

Before The Bell - Stocks futures are pointing to a mixed opening this morning on news of a spike in coronavirus cases in Europe. Investors appear to be shuffling their portfolios in response, with a rotation into the technology sector.

 

Thursday’s market action was also mixed. The Dow Jones Industrial Average lost 60 points, but the S&P 500 gained 16 points and the tech-laden NASDAQ advanced 72 points. The S&P 500 and the NASDAQ closed at all-time highs.

 

The Dow was hurt by a pullback in shares of Cisco Systems (CSCO), as the telecommunications equipment giant provided disappointing guidance.

 

Otherwise, information technology stocks were clearly favored, in a bit of a replay of the strategy that worked best during the height of the pandemic. Flare-ups of Covid-19 cases, or new strains of the virus, are being reported both stateside and in different regions of the globe.

 

Shares of a number of retailers were also winners as consumers flexed their buying power. Macy’s (M) stock surged on a strong earnings report.

 

Not all retailing issues are pushing higher, as some stores are having more trouble passing along higher costs to shoppers. But the demand for goods is encouraging for investors.

 

Spending patterns gained strength in October, according to retail sales data the Commerce Department released earlier this week.

 

The pickup appears to be part of a catchup in economic activity following the third quarter’s comparatively weak 2.0% rate of GDP expansion. The Federal Reserve Bank of Atlanta’s running estimate for fourth quarter GDP is a robust 8.2%.

 

However, that figure does not take into account the chance that the coronavirus will hinder the comeback in business conditions, as was the case in September, when the surging Delta variant caused scheduled returns to offices to be pushed back.

 

The chance that the economy might not reopen as quickly or fully as expected seemed to weigh on the performance of several sectors, including financials, industrials, and energy-related shares.

 

Energy stocks were also weighed down by a dip in oil prices, which are falling further this morning. The concern is that travel will be stifled by another wave of coronavirus cases, this time centered in Europe.  Austria has announced vaccine mandates, and the number of Covid-19 cases in Germany is reported to be surging.

 

More broadly, the uptick in infections is dampening sentiment toward travel-related stocks and bringing so-called stay-at-home stocks back into favor. This trend might not prove as pronounced as it was in 2020, but it could nonetheless persist until the number of cases starts moving down again. - Robert Mitkowski

 

At the time of this writing, the author did not have positions in any of the companies mentioned in this article.

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