Vaccine adoption rate is the wildcard for Wall Street rally

NEW YORK: News this month of three promising coronavirus vaccines has helped push the Dow Jones Industrial Average over 30,000, but some investors worry that slow vaccination rates may weaken next year's expected economic recovery.

Overall, 58 per cent of Americans said in a Gallup poll that ended November 1 that they would get vaccinated, up from 50 per cent who were willing in a September poll. Forty-two percent said they would be unwilling to get a vaccine, citing reasons such as the rushed development timeline and concerns about safety.

Delays in vaccine distribution or widespread refusal to be vaccinated would allow the virus to continue to circulate longer and delay the development of herd immunity, which occurs when enough people in a population have some protection that prevents the easy spread of a disease.


Targeted vaccinations could revive the economy even with delays in widespread adoption, said Jonathan Golub, Credit Suisse Securities.

“The successful vaccination of seniors and front-line workers could expedite the renormalization process well before herd immunity is achieved,” he said. The S&P 500 may reach 4,050 by the end of 2021, up about 13 per cent from its current level, he estimated.

While vaccine adoption rates are a “wildcard,” their availability removes the risk of another widespread economic lockdown, said John Buckingham, portfolio manager at Kovitz Investment Group.