S&P 500 hits 4,700, pumped up by strong US data, Pfizer pill, falling yields

• The S&P 500 hit 4,700 for the first time on Friday and looks poised for a seventh day of gains.
• US equities are boosting on strong US employment data / positive news on COVID-19 treatment and falling yields.

The S&P 500’s run to the upside continues, with the index hitting 4,700 for the first time in history amid widespread gains across all equity sectors. A positive close on Friday would mark seven consecutive sessions higher and mean that the index has only fallen in two of the last 18 sessions. The S&P 500 has risen more than 2.0% for the week, its best streak since June, and is on track for 5 consecutive weeks up, the best streak since August 2020. While gains have underpinned much of the recent rally The focus has shifted elsewhere in the latter part of this week, with broadly dovish messages from central banks like the Fed, ECB, RBA and BoE.

Stocks have also been getting a boost from news that Pfizer halted a trial of an experimental antiviral pill after early results showed the drug reduced the chances of hospitalization and death in at-risk adults by 89%. The company said it would present the findings to the US FDA for emergency use authorization as soon as possible. Some analysts are framing the latest Pfizer news as a “game changer” and “the end of the pandemic,” which may be a bit of a stretch, but with vaccines already significantly reducing the number of deaths from the virus and now added confidence. Since death rates may be reduced by an additional 90%, public health confidence is likely to be dramatically better in 2022 versus 2021 and 2020.

Unsurprisingly, equity sectors affected by the pandemic, such as travel stocks, are on the rise. The S&P 1500 Airlines Index is up 6.5% on the day, and major cruise stocks (such as Carnival and Royal Caribbean Cruises) are up just 10%. On the other hand, stocks that have benefited from the locks and the transition home working like Zoom and Netflix suffered. There has also been a lot of attention on the Pelaton Interactive share price, which has fallen more than 30% on Friday, although this is due to poor earnings more than anything else.