9/13/2020: Weekly Wrap-up and What to Expect

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AstraZeneca start dosing their COVID vaccine clinical trial again after their vaccine raised patient safety concerns.


The S&P 500 dropped ~3.3% last week after relatively steady growth for the past two months. Much of the recent sell-off is due to tech companies such as Tesla, Microsoft, Apple, etc. hitting all-time highs. Most investors believe this is a market correction while a few believe that this is the second market crash. There’s a lot going on, but we’ll break it down for you. Here are the details:

  1. 📈 COVID cases continue to decrease while hospitalizations and deaths begin to near all-time lows. Since reaching peak cases, hospitalizations, and deaths related to COVID in late July / early August, the U.S. has steadily brought down these key metrics. COVID-related hospitalizations and deaths have begun to near all-time lows and may hit lows in the next month or so. While the overall nation is recovering, there are still hotspots within the U.S. and concern is growing as we’re entering the fall and winter seasons when viruses are typically more infectious.

  2. 📈The number of reopened / reopening states increased by four, driven by New Jersey, North Carolina, Louisiana and Maryland. With the virus count decreasing in most states, we’ve seen a greater number of states reopen or stop the reversal of their reopening process. At this point, 29 of 50 (58%) of states are in the reopening process or have already reopened. As this continues, we’ll see the economic recovery gain momentum as businesses start seeing more activity and begin to operate at a greater capacity.

  3. 📈 Unemployment claims remain steady at 884K while the unemployment rate decreased to 8.4%. Overall, the market reacted positively to the unchanged unemployment claims number from last week and the significant drop in the unemployment rate since last month. These numbers are a good indication of economic recovery as more people are going back to work. However, these positive metrics did not have enough impact on the markets to offset the dramatic tech sell-off we’ve seen in the past two weeks.

  4. 📈 AstraZeneca resume COVID vaccine dosing after a brief pause in their clinical trial due to a potential patient reaction to the vaccine. Last week, AstraZeneca (NYSE: AZN) paused its ongoing global clinical trials for its COVID vaccine when a patient had a potential reaction to the drug. However, just yesterday, the company announced that it was continuing its vaccine dosing for UK trials after getting the green light from the country’s safety watch dogs. The company is working closely with other government agencies to start up trials again globally. The company noted that it will provide the vaccine broadly, equitably, and at no profit during the pandemic.

  5. 📉 Second stimulus check seems unlikely as Senate Democrats and Republicans cannot come to an agreement over the size of the relief plan. Another stimulus package is growing more unlikely as Senate Democrats shot down a $300B ‘skinny’ bill proposed by the Republicans. The proposed bill was far from previous negotiations that ranged between $1.5T - $2.2T. Much of the rationale behind the smaller bill is because unemployment has been decreasing without the help of additional stimulus and inflation has already been increasing with the previous stimulus checks. Stimulus checks would have definitely driven up the stock market given low interest rates and an increase in retail investor activity, so a lack of stimulus checks will limit the upward stock market movement.

Despite the recent sell-off in tech stocks, WX Capital remains confident in the U.S. economic recovery and biotech performance. Overall, we have confidence in the U.S. recovery as unemployment continues to decrease, states continue to reopen, and COVID cases, hospitalizations, and deaths continue to decline. Vaccine manufacturers are continuing to make progress on the vaccine, which will hopefully be available late 2020 or early 2021. Furthermore, biotech has done exceptionally well as companies have demonstrated successful drug development and M&A activity has kicked off for the season with a $20B Immunomedics ($IMMU, one of our previous holdings) buyout. As always, please don't hesitate to reach out with questions!


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