Stocks sailed to record highs Monday before paring some gains as traders took in promising data on a leading COVID-19 vaccine candidate as well as President-elect Joe Biden’s victory in the U.S. presidential election, ending a days-long nail-biter over which candidate would prevail in winning the White House.
The S&P 500 jumped as much as 3.9% to more than 3,600 at session highs, topping its previous record intraday high of 3,588.11 from September, and its record closing high from that same day. The Dow gained as many as 1,610 points, or 5.7% to its own all-time high of more than 29,800. The Dow’s previous record intraday high was 29,568.57 from February. Both indices cut gains in the minutes leading up to market close, however.
The Nasdaq lagged and closed in negative territory, however, as hopes for a vaccine prompted traders to turn away from software stocks and other members of “stay-at-home” trade. Shares of Zoom Video Communications (ZM) and Peloton (PTON) each sold off on Monday. However, stocks poised to benefit from a broader economic reopening including airlines, cruise lines and lodging firms each surged.
Shares of Pfizer (PFE) jumped more than 7.5% after the company announced that their clinical trial showed that their vaccine candidate was more than 90% effective in preventing COVID-19 in participants with no evidence of a previous coronavirus infection. Shares of BioNTech (BNTX), which is working on the vaccine alongside Pfizer, also gained more than 16%.
Clarity around the results of the presidential election also helped fuel a market rally. Biden, alongside Vice President-elect Kamala Harris, is set to usher in a push for bigger fiscal stimulus, a public option in health care, investment in sustainability, and a more measured approach to foreign policy and trade, among other key issues. And in his victory speech Saturday, Biden promised to work toward these goals with an eye toward uniting a deeply divided nation, calling for an end of “this grim era of demonization in America” and underscoring that “if we can decide not to cooperate, then we can decide to cooperate.”
So far, traders have cast bets that some of the suspected “market negative” potential of a Biden presidency, such as a move to raise corporate taxes, would be tempered by a Senate that remained under Republican control. Two Senate races remain outstanding in Georgia and will not be decided until January, though prediction markets have so far given Democrats relatively slim odds of winning both seats needed for the party to claim a majority in the chamber.
“A divided government would constrain the Biden administration’s ability to implement plans for large-scale fiscal stimulus and public investment, tax, healthcare and climate related legislation,” analysts from BlackRock Investment Institute said in a note Saturday. “We see an increased focus on sustainability under a divided government, but through regulatory actions, rather than via tax policy or spending on green infrastructure. It also would likely signify a return to more predictable trade and foreign policy – even as U.S.-China rivalry is set to stay elevated due to bipartisan support for a more competitive stance.”
The analysts added that “some fiscal stimulus looks possible” during the lame-duck session in Congress, though the size and scope of any forthcoming package is likely to be much smaller than what a united Democratic government might have advanced.
“We’re monitoring the fiscal response closely, as a premature retrenchment could set back an economic restart that has so far surprised to the upside,” they said.
Other economists also expressed optimism that a stimulus package might get passed ahead of Inauguration Day, even after the months’ worth of discussions between Trump administration officials and congressional lawmakers fizzled out without an agreement.
“We are becoming increasingly hopeful that pressure from business leaders and vulnerable Republican Senators in 2022 will mean that something can pass before the end of the year, and very preferably before the end of the month,” Ian Shepherdson, chief economist for Pantheon Macroeconomics, said in a note Sunday.
And for the high-flying tech stocks that have driven the market higher for much of this year, a Biden presidential victory with a likely Republican Senate poses the “goldilocks Election outcome,” according to WedBush analyst Dan Ives.
“Investors should expect a ratcheting down of US/China tensions and the ‘decoupling path’ of the Cold Tech war, which is a bullish sign for Apple (AAPL) and semi [semiconductor] stocks looking ahead,” Ives said in a note Saturday. Concerns of a tougher antitrust environment for Big Tech companies have also likely eased, he added.
Biden is also set to strike a more serious tone on combatting the coronavirus pandemic, with the outbreak having already taken the lives of more than 230,000 Americans, sickened more than 9.8 million and dragged U.S. economic activity to a historic nadir. And while vote counts were under way last week, coronavirus cases hit a grim milestone in the United States: A record more than 120,000 new cases reported on Friday alone. Biden announced a new 13-person coronavirus task force on Monday, as one of his first major acts during his presidential transition.
4:04 p.m. ET: Dow climbs 835 points, or 3%, to pare some gains after soaring to a record intraday high
Here were the main moves in markets as of 4:04 p.m. ET:
S&P 500 (^GSPC): +41.08 (+1.17%) to 3,550.52
Dow (^DJI): +834.57 (+2.95%) to 29,157.97
Nasdaq (^IXIC): -181.45 (-1.53%) to 11,713.78
Crude (CL=F): +$2.92 (+7.86%) to $40.06 a barrel
Gold (GC=F): -$86.20 (-4.42%) to $1,865.50 per ounce
10-year Treasury (^TNX): +13.8 bps to yield 0.9580%
2:37 p.m. ET: Crude oil posts biggest jump in 6 months amid vaccine hopes
U.S. West Texas intermediate crude oil prices (CL=F) jumped 8.5%, or $3.15 per barrel, to settle at $40.29 per barrel Monday afternoon, as hopes of a vaccine and broader economic reopening drove optimism over heightened energy demand. The energy sector far and away led gains in the S&P 500 Monday afternoon, surging more than 15% versus the broader market’s gain of just over 2.6%.
Still, crude oil prices remain lower by more than 30% for the year to date, with futures at one point having turned negative this spring before recovering.
11:45 a.m. ET: Why Pfizer’s promising vaccine data is bullish for Moderna: Morgan Stanley
Pfizer’s upbeat vaccine trial data, showing a more than 90% efficacy in preventing COVID-19 in patients without prior history of infection, points to potentially promising results for Moderna’s (MRNA) own vaccine candidate, according to Morgan Stanley equity analyst Matthew Harrison. Shares of Moderna were up more than 7.5% intraday on Monday.
Moderna’s candidate, like Pfizer’s, is based on messenger RNA (mRNA) technology, which produces a synthetic version of the mRNA a virus uses to build its proteins to teach cells how to create their own and eventually build immunity. Moderna calls its vaccine candidate mRNA-1273.
“Pfizer’s strong data should translate to mRNA-1273 since the level of neutralizing antibodies for mRNA-1273 is the same or better than Pfizer in earlier stage studies,” Harrison said in a note Monday. “We await potential differentiation in patient sub-groups or secondary endpoints (such as non-symptomatic infections).”
Harrison added that Modern’s vaccine candidate, if successful, will likely be easier to transport and thereby distribute en masse, since it does not require the same ultra-cold temperatures for storage.
“Moderna requires transport at -20C (vs. -80C for Pfizer), and can be stored at regular refrigeration for a week (vs. 24 hours for Pfizer) and requires no one-site dilution (vs. dilution required for Pfizer),” he said. “We see these factors as helping to maintain a commercial edge even with similar efficacy.”
9:54 a.m. ET: Stay-at-home trade comes unwound after promising vaccine data, while reopening stocks rally
Shares of companies that comprised the “stay-at-home” trade, or those viewed as beneficiaries of widespread social distancing and working and schooling from home, tumbled Monday morning after Pfizer and BioNTech released promising data around the efficacy of their COVID-19 vaccine candidate.
A vaccine has been viewed by many market pundits, business executives and policymakers as the key tenet of a sustained rebound in economic activity and corporate profitability, since without one, consumers would likely remain to some extent on the sidelines on returning to previous spending behaviors.
“The strong results from the Pfizer vaccine were better than most expected and means we could be opening back up sooner than expected,” Ryan Detrick, chief market strategist for LPL Financial, said in an email to Yahoo Finance Monday morning. “Coupled with an economy that continues to surprise to the upside and the stock market is now pricing in the prospects of a much better economy in ’21.”
The “reopening trade,” meanwhile, came roaring back to life. These included stocks like American Airlines (AAL), Delta Airlines (DAL), Southwest Airlines (LUV), Carnival (CCL), Norwegian Cruise Line Holdings (NCLH), Wynn Resorts (WYNN), Planet Fitness (PLNT), which each gained by double-digit percentages Monday morning. Each of these stocks stand – among many others – stand to benefit from a pick-up in travel and leisure spending, which had been weighed down by the pandemic.
Elsewhere in risk assets, West Texas intermediate crude oil prices (CL=F) and Brent crude (BZ=F) also each jumped by more than 9% Monday morning, with an increase in travel poised to drive a pick-up in demand for energy.
9:37 a.m. ET: Stocks soar to record levels, Dow adds more than 1,450 points
The Dow and S&P 500 each surged Monday morning as markets opened for trading.
Here were the main moves in markets, as of 9:37 a.m. ET:
S&P 500 (^GSPC): +132.72 points (+3.78%) to 3,642.16
Dow (^DJI): +1,486.64 points (+5.25%) to 29,810.04
Nasdaq (^IXIC): +110.27 points (+0.92%) to 11,998.57
Crude (CL=F): +$3.85 (+10.37%) to $40.99 a barrel
Gold (GC=F): -$69.20 (-3.55%) to $1,882.50 per ounce
10-year Treasury (^TNX): +10.9 bps to yield 0.929%
9:20 a.m. ET: Biden announces 13 health experts will comprise his Transition COVID-19 Advisory Board
Confirming reports from over the weekend, Biden on Monday announced 13 health experts would be part of his Transition COVID-19 Advisory Board to help inform his approach to combatting the pandemic in the U.S.
“The advisory board will help shape my approach to managing the surge in reported infections; ensuring vaccines are safe, effective, and distributed efficiently, equitably, and free; and protecting at-risk populations," Biden said in a statement.
The board will be co-chaired by three individuals, including Dr. David Kessler, who served as FDA Commissioner from 1990 to 1997, Dr. Vivek Murthy, who served as U.S. Surgeon General from 2014 to 2017, and Dr. Marcella Nunez-Smith, whose work at Yale University focuses on promoting health-care for structurally marginalized populations.
8:28 a.m. ET: Biden applauds Pfizer’s vaccine progress, but warns ‘end of the battle against COVID-19 is still months away”
Biden, in a statement Monday morning, congratulated Pfizer for its work on its COVID-19 vaccine, but urged Americans to remain vigilant in wearing masks and social distancing to keep the spread of the virus under control.
“The end of the battle against COVID-19 is still months away,” Biden said in the statement. “This news follows a previously announced timeline by industry officials that forecast vaccine approval by late November. Even if that is achieved, and some Americans are vaccinated later this year, it will be many more months before there is widespread vaccination in this country.”
“This is why the head of the CDC warned this fall that for the foreseeable future, a mask remains a more potent weapon against the virus than the vaccine,” he added. “Today's news does not change this urgent reality. Americans will have to rely on masking, distancing, contact tracing, hand washing, and other measures to keep themselves safe well into next year. Today’s news is great news, but it doesn't change that fact.”
7:16 a.m. ET: Dow futures surge more than 1,400 points after upbeat vaccine data, Biden victory
Here were the main moves in equity markets, as of 7:16 a.m. ET:
S&P 500 futures (ES=F): 3,629.40, up 119.5 points or 3.4%
Dow futures (YM=F): 29,737.00, up 1,456 points or 5.15%
Nasdaq 100 futures (NQ=F): 12,144.25, up 98.25 points or 0.8%
7:10 a.m. ET Monday: Pfizer, BioNTech, say their COVID-19 vaccine candidate is more than 90% effective
Shares of Pfizer and German drug-maker BioNTech each soared Monday morning after the companies announced that their Phase 3 clinical trials showed their COVID-19 vaccine candidate was more than 90% effective in preventing the coronavirus in participants with no evidence of a previous infection.
The trial’s analysis assessed 94 confirmed COVID-19 infections among nearly 44,000 participants.
“The case split between vaccinated individuals and those who received the placebo indicates a vaccine efficacy rate above 90%, at 7 days after the second dose,” the companies said in a statement. “This means that protection is achieved 28 days after the initiation of the vaccination, which consists of a 2-dose schedule.”
The companies added that they planned to submit a request for Emergency Use Authorization of their vaccine candidate to the U.S. Food and Drug Administration after they have a total of two months’ worth of data to achieve the agency’s safety requirements. This is expected to take place in the third week of November.
6:01 p.m. ET Sunday: Stock futures open higher after Biden named winner of presidential election
Here were the main moves in markets, as of 6:01 p.m. ET Sunday evening:
S&P 500 futures (ES=F): 3,517.00, up 16.25 points or 0.46%
Dow futures (YM=F): 28,334.00, up 130 points or 0.46%
Nasdaq futures (NQ=F): 12,141.5, up 66.5 points or 0.55%