Global Stocks Slide As Global Economic Shutdowns Loom

Global Stocks Slide As Attention Turns To Global Economic Shutdowns

Tyler Durden

Monday's global stock rally unleashed by a 2nd round of covid vaccine hopes this time courtesy of Moderna, and which pushed the Dow and all major indexes to new record highs, fizzled on Tuesday as investors shifted focus back to the accelerated near-term spread of the virus and the creeping shutdowns which are certain to hammer the US economy. S&P futures dropped 0.5% or 20 points as New Jersey, California and Iowa imposed fresh restrictions as the number of new US cases hit a record, and threatened to worsen as the colder weather sets in. Nasdaq 100 futures were boosted by yet another reversal in the reflation trade, as well as a jump in Tesla on the prospect of the electric-car maker’s shares joining the S&P 500.

Curiously, the same 3,600 "gamma wall" level which we warned yesterday would complicate a major push higher in the S&P ahead of op-ex, is now serving as a buffer to the downside, and will limit losses. Sure enough, the Emini session low so far today has been... 3,600.

S&P 500 futures slid a day after the underlying benchmark closed at an all-time high on news that Moderna’s vaccine was shown to be 94.5% effective. Drug retailers such as Walgreens Boots Alliance tumbled 10%, while CVS Health Corp fell 6.4% after Amazon launched an online pharmacy for delivering prescription medications in the U.S.

"We might be transitioning from a defensive bull market to a more cyclically offensive one but more clarity is required in terms of when social mobility will normalize,” said Chris Iggo, chief investment officer of core investments at Axa Investment Managers. "The euphoria created by the presidential election result and the vaccine announcement will give way to a more sober analysis of how long and smooth the road to recovery will be."

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