Wall Street Opens Higher as Investors Look Through Covid Surge; Dow up 220 Pts

U.S. st0ck markets opened higher on Friday as some solid earnings reports helped investors to look through a disturbing surge in Covid-19 cases and look ahead to the time when vaccines will be widely available to bring the pandemic under control.

By 9:40 AM ET (1440 GMT), the Dow Jones Industrial Average was up 218 points, or 0.8%, at 29,298 points. The S&P 500 was also up 0.8% and the NASDAQ Composite was up 0.9%.

The broad move higher was in sharp contrast to the pattern for much of this week, which started with cyclicals and old-economy names benefiting at the expense of tech and growth stocks on Monday in response to Pfizer (NYSE:PFE)’s announcement that its experimental vaccine for Covid-19 was over 90% effective. That rotation reversed over the rest of the week as markets absorbed both the challenges in getting vaccines distributed and the worsening current situation. The U.S. posted over 153,000 new cases on Thursday, a new record, while the seven-day average death rate rose to over 1,000 for the first time since August.

Strategists at Goldman Sachs (NYSE:GS) argued however that the year ahead still looks bright for equities, as a receding Covid-19 pandemic allows for a rebound in corporate earnings.

“We expect to see a continued rotation of leadership in the markets supported by stronger growth, steeper yield curves and higher commodity prices,” analysts led by Peter Oppenheimer said in a note to clients. While they tried not to sound too bearish on tech and growth stocks, they noted that “record valuation spreads and an inflection point in growth and bond yields point to a period of outperformance of Cyclical and Value areas of the markets,”

Among the early movers, networking gear maker Cisco (NASDAQ:CSCO) stock rose 7.0% on the back of better-than-expected results for its fiscal first quarter and the promise that it would snap a year-long streak of falling revenues in the current quarter.

Walt Disney (NYSE:DIS), which like Cisco reported earnings after the closing bell on Thursday, also rose, albeit by a more modest 2.3%, after its quarterly numbers were rescued by a strong performance from its Disney+ streaming unit. Lower box office revenues and capacity-constrained theme parks still made for a second straight quarterly loss, however.

DraftKings (NASDAQ:DKNG) stock rose 7.0% after the sport betting company said its monthly users passed the 1 million mark for the first time in the last quarter.

There was little reaction to data released earlier showing that producer prices had increased more rapidly than expected in October, with most of the increase coming through food prices. The producer price index rose 0.3% on the month, but the core PPI that excludes food and energy rose only 0.1%. The Michigan Consumer Sentiment index for November meanwhile fell for the first time in three months.

Other notable gainers were the ADRs of Chinese makers of electric vehicles, in the wake of new policy goals set by Beijing that seeks to ban the sale of new internal combustion engine vehicles from 2035.

Xpeng (NYSE:XPEV) and Nio (NYSE:NIO) ADRs both gained 11%, to be up 43% and 29% respectively for the week. Li Auto (NASDAQ:LI)ADRs rose 20% to be up 47% for the week. Some of the money flowing into those stocks appears to have come from Tesla holders. Tesla (NASDAQ:TSLA) stock on course to end the week down 5.0%.