U.S. stocks soared in early trading Monday, sending major equity benchmarks to record highs after Germany-based BioNTech SE and Pfizer Inc. said their COVID-19 vaccine candidate achieved “success” in the first interim analysis of a Phase 3 study.
Assets considered risky had already received a boost before the open as former Vice President Joe Biden was projected over the weekend to defeat President Donald Trump in a heated election.
How are stock benchmarks performing?
The Dow Jones Industrial Average
rose 1,415 points, or 5%, to 29,738, surpassing its previous record of 29,568.57 on February. The S&P 500
jumped 122 points, or 3.5%, to 3,632, speeding past its last all-time intraday high of 3,588.11 on September. The Nasdaq Composite
climbed 92 points, or 0.8%, to 11,987, near its record intraday high at 12,074.07.
What’s driving the market?
Markets were ebullient early Monday after Pfizer
said their BNT162b2 vaccine candidate was found to be more than 90% effective in preventing COVID-19 in trial participants without previous evidence of SARS-CoV-2 infection.
The companies said they are planning to submit for Emergency Use Authorization (EUA) to the Food and Drug Administration soon after the safety milestones are met, which is currently expected in the third week of November.
The report helped to deliver a fillip to a market that had already been upbeat on clarity on the election front.
On Saturday, Biden was seen surpassing the 270 Electoral College votes needed to win the presidency, four days after Election Day, reducing the prospect of a drawn-out vote count in a testy race for the White House that had the potential to roil markets, at least in the near term. Trump has yet to concede, however, and his campaign continued to press legal challenges in several states.
Big gains last week, the strongest since April, came on rising expectations that Biden would be declared the winner and a divided Congress would result in a scenario that many investors view as less likely to result in changes to policy that might be seen as disruptive, including higher taxes and tightened regulation.
“While the control of the U.S. Senate is still to be determined, markets are reacting as if Republicans will continue to hold this part of Congress. If this is true, taxes are likely to remain at current low levels and interest rates will stay near zero for a long time,” wrote Hussein Sayed, chief market strategist at FXTM in a Monday research note.
“That is the best environment for growth stocks, particularly the tech sector. Hence, they are continuing to outperform the broader market,” the analyst wrote.
To be sure, Trump has threatened to fight the election results, but few experts believe there are viable paths to reversing the outcome and market participants appeared willing to look past that concern.
“Joe Biden won the U.S. presidential election but there are no signs that President Trump will concede, and that suggests that we are likely to be in for a long drawn-out affair with respect to the validity of certain state results,” wrote David Madden, market analyst at CMC Markets UK.
“For now, traders are not worried about a possibility of anything other than Joe Biden becoming U.S. president in January,” he said.
Which companies are in focus?
- Pfizer and BioNTech shares soared at the start of trading. Pfizer was up 8.3%, while BioNTech jumped 16.4%.
AMC Entertainment Holdings Inc.’s beaten-down shares
Airline shares were all rising sharply. Southwest Airlines
and Delta Airlines
were all up over 20% on Monday. Shares of Boeing Co.
were up 14.2%.
Cruise line stocks were set to enjoy significant gains. Royal Caribbean
shares were up 28% and Carnival shares
were gaining 43%.
North Face parent VF Corp.
said Monday that it had acquired streetwear brand Supreme. VF Corp.’s shares were up over 15%.
Stocks that benefited from work-from-home arrangements took a dive. Shares of Peloton Interactive Inc.
Which assets are on the move?
The yield on the 10-year Treasury note
gained 11 basis points to 0.930%, a basis point away from last Tuesday’s high of 0.94%.
The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, was down less than 0.1%.