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S&P 500 Won’t Catch a Break After Moderna & Fauci’s Disastrous Blows

Last Updated September 23, 2020 2:31 PM
Joseph Young
Last Updated September 23, 2020 2:31 PM
  • Moderna CEO Stéphane Bancel cautioned that the drop in infection rates could prolong data analysis to December.
  • The possibility of delayed vaccine distribution until the year’s end could hinder the momentum of the S&P 500.
  • In addition to vaccine uncertainty, Anthony Fauci and the IATA are cautioning against other potential pandemic-related issues.

Anthony Fauci believes COVID-19 might not go away, and Moderna hinted at a potential delay in the trial data release. The two pessimistic outlooks come as the S&P 500 continues to underperform .

S&P 500
The stagnant one-month performance of the S&P 500 index. | Source: Yahoo Finance 

The S&P 500 Index has declined by 6.3% since September 2 and is showing signs of weakness.

Vaccine Optimistism Is Crucial for the S&P 500’s Near-Term Outlook

The U.S. economy is slowing, the dollar is declining, and business productivity is not recovering.

Surging global liquidity, low-interest rates, and optimism around vaccines  have catalyzed the S&P 500 Index’s rebound.

But scientists, vaccine manufacturers, and even the International Air Transport Association (IATA) are voicing caution.

On September 18, Moderna CEO Stéphane Bancel said the likely timeline for an interim vaccine analysis is in November . According to Bancel, the research could be delayed to December if infection rates in the U.S. drop .

Moderna is working with 25,000 participants for its vaccine trials, and 10,000 individuals received both doses.

Speaking to the Financial Times, Bancel said the ideal plan is to complete the trial by October but emphasized it is unlikely:

Our best plan is October. I think it’s unlikely but it is possible.

Bancel’s cautious tone on vaccine trials could hinder the stock market’s momentum. Markets expect vaccines by the year’s end to fully reopen the economy and revive business productivity.

The prospect of potential delays could hurt investor confidence, especially given the ongoing struggles of the U.S. economy .

Other countries also face the risk of a rapidly-slowing economy, including Britain. Watch the video below:

Federal Reserve Chairman Jerome Powell echoed a similar sentiment. He said a fast economic recovery from the pandemic is unlikely to last.

The S&P 500 Index saw an explosive rally from April to August, but it has slumped for over two weeks.

Earlier this week, Powell said more fiscal support could be necessary :

… my sense is that more fiscal support is likely to be needed. Of course, the details of that are for Congress, not the Fed, but I would just say there are still roughly 11 million people still out of work due to the pandemic.

There are More Possible Issues in the Near Term

In addition to the obstacles in vaccine production, there are potential variables that could weigh down the S&P 500.

Speaking to Business Insider, Fauci said that COVID-19 might not be wholly eradicated :

We may not completely eliminate it, but if you get it down to such a very low level, and enough of the population is protected — either by a vaccine or by previously having been infected — then you’ll develop a degree of herd immunity that you won’t have an outbreak.

The risks of a prolonged pandemic , possible delays in vaccine trials, and distribution problems could cause difficulties for an economic recovery.

The U.S. baseline COVID-19 cases remain the highest. | Source: worldometers.info 

As CCN.com previously reported, the IATA also cautioned that distributing COVID-19 vaccines to billions of people would be the greatest transportation challenge in history.

Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. Unless otherwise noted, the author has no position in any of the securities mentioned.