Investors cheered on Monday after drugmakers Pfizer and BioNTech said trial data indicated their Covid-19 vaccine is 90% effective.
Many
on Wall Street applauded the announcement as a sign that the
pharmaceutical industry may soon have a viable way to control a disease
that has derailed the U.S. economy for much of 2020 and has killed more
than 230,000 Americans.
Futures on the Dow Jones Industrial
Average surged 1,500 points, or 5.2%, implying an opening gain of more
than 1,400 points. The Dow’s previous intraday record was 29,568.57,
about 1,245 points from Friday’s close.
S&P 500 futures jumped 3.4%.
Tech-heavy
Nasdaq 100 futures fell 0.5% as traders left crowded growth and
stay-at-home stocks in favor of cyclical companies that could outperform
if the Pfizer vaccine is approved for widespread use.
Stocks were
already set to continue their big post-election rally Monday as
Democrat Joe Biden defeated incumbent Donald Trump in the U.S.
presidential race to become president elect, according to NBC
projections.
Dow futures were up about 400 points before the vaccine news.
The
90% effective rate from Pfizer and Germany’s BioNTech was better than
what the market was expecting. Dr. Anthony Fauci, the director of the
National Institute of Allergy and Infectious Diseases, has said that a
vaccine that was 50% to 60% effective would be acceptable.
“Amazing
news from Pfizer with 90% efficacy. This hopefully is the beginning of
the end of our fight against Covid,” Peter Boockvar, chief investment
officer at Bleakley Advisory Group, wrote in an email.
“As I’ve
been saying on the hopes of this, we need to shift our attention to
those parts of the market that have been the most hammered because of
Covid and away from the work from home stocks that have had such an
incredible year because Covid is not forever,” he added.
Travel, restaurant and hospitality companies that saw their equities swoon in the spring as Covid surged saw some of the strongest rallies on Monday following Pfizer’s announcement.
“It
is materially bullish for stocks in the near term,” said Tom Essaye of
The Sevens Report. “Regarding the data, the 90% efficiency rate in
preventing COVID-19 is higher than was hoped for...Given election
clarity and the calendar (holiday’s approaching), a run in the S&P
500 to 3900 is not unreasonable. ”
Shares of cruise-operator Carnival Corp. rocketed higher by 18%, Southwest Airlines jumped 9% and the Walt Disney Company popped 6% as investors bet a vaccine may allow more vacationers to attend its many amusement parks.
“I
think that the rally is justifiable. I think we’re going to start a new
discussion, and the discussion is what’s America going to look like
post Covid,” said CNBC “Mad Money” host Jim Cramer. “If you think
about where we were last week, where we felt that there was very little
chance to be able to stop this thing, now suddenly we have hope.”
The
Monday rally for equities also marked the first trading day after NBC
News projected that former Vice President Joe Biden won the 2020
presidential election against incumbent President Donald Trump. The call
came four days after Election Day and amid close counts in several
battleground states.
Wall Street hoped the victory for Biden would
reduce the odds of a drawn-out election fight, even as Trump refused to
concede. Many traders had put on bets for market volatility in November
and were unwinding those positions, helping fuel a rally.
In the
meantime, the chances of a “blue wave” that sweeps Democrats into the
majority of both the Senate and the House have waned, meaning
drastic policy changes such as tax hikes are less likely.
“A Biden
presidency with a Republican Senate would be unlikely to see any
increase in taxes, which was arguably the biggest fear investors had
about a Biden presidency,” Brian Levitt, global market strategist at
Invesco, said in a note on Sunday. “And a Biden presidency could mean a
return to a more traditional, predictable approach to trade policy,
which would likely result in less volatile markets.”
Democrats are
projected to keep their House majority, although Wall Street was
watching closely as Senate control is still in limbo. Both of Georgia’s
Senate races are likely going to runoffs slated for early January.
Stock futures gained even as Trump is refusing to concede the election, vowing that as soon as Monday his team will start “prosecuting our case in court to ensure election laws are fully upheld.”
The
president and his surrogates have launched lawsuits in multiple key
states, including Pennsylvania and Michigan, and have signaled they plan
to press for recounts in some close races.
Biden announced Monday morning the members of his coronavirus task force, who will be charged with crafting a plan to curb the spread of the coronavirus as it reaches record-level highs in the U.S.
Among
its ranks are Dr. Ezekiel Emanuel, chair of the Department of Bioethics
at The Clinical Center of the National Institutes of Health, and Dr.
Michael Osterholm, director of the Center for Infectious Disease
Research and Policy at the University of Minnesota.
The U.S. reported more than 126,000 new cases of the coronavirus
two days in a row and has reported a new record daily spike in cases
every day over the past four days, according to data compiled by Johns
Hopkins University.
“As the election focus starts to fade,
investors will begin paying more attention to Covid as cases continue to
explode and Europe institutes a series of mitigation measures,” Adam
Crisafulli, the founder of the Vital Knowledge, said in an note on
Sunday. “Vaccine anticipation has helped protect stocks from the ugly
virus headlines.”
