Dow Rises on Covid-19 Vaccine Results
|11/23/2020 | 02:19pm|
By Joe Wallace and Alexander Osipovich
U.S. stocks climbed Monday after promising results on a Covid-19 vaccine bolstered hopes for an economic rebound in 2021.
The Dow Jones Industrial Average rose 224 points, or 0.8%, in afternoon trading, recovering some ground after it closed last week with losses.
The S&P 500 added 0.3%, while the technology-heavy Nasdaq Composite ticked up 0.1%.
All three indexes rallied after the opening bell but later pared gains in choppy trading, with the S&P 500 and Nasdaq both dipping briefly into negative territory.
The University of Oxford and AstraZeneca said their vaccine was found to be as much as 90% effective in preventing infections, depending on the dosage given, without serious side effects. The results -- based on a large trial -- added to optimism among investors that the deployment of effective vaccines can help bring coronavirus under control next year, allowing beaten-down sectors of the economy to recover.
"When you look into the details, it looks like very good news," said Paul O'Connor, head of multi asset at Janus Henderson Investors. "There's a growing prospect of a significant normalization of economic activity in the second half of next year," he added.
Unlike shots under development from Pfizer and Moderna, AstraZeneca's vaccine can be stored at temperatures above zero degrees Celsius, potentially easing the distribution process.
Pfizer and partner BioNTech on Friday asked the Food and Drug Administration to clear the companies' Covid-19 vaccine and said distribution could potentially begin in mid-December.
Meanwhile, preliminary data showed U.S. business activity accelerated in November to a more than five-year high despite a surge in coronavirus infections and tightening restrictions. The data from IHS Markit, based on surveys of purchasing managers, showed both manufacturing and services activity remained in expansion territory.
Still, analysts worry the surge of Covid-19 cases could weigh on economic growth in the coming months, especially as the impact of government stimulus programs enacted in the spring wears off.
"You've got Covid cases rising at an alarming rate in the U.S. and Europe, and restrictions that look like they'll be harsher than what we thought a month ago," said Christopher Smart, chief global strategist at Barings.
He also warned coronavirus-fueled job losses in some sectors and at smaller businesses could prove longer lasting than markets expect. "Even as the vaccines start rolling out, there will still be scars and damage that will slow the overall recovery," Mr. Smart said.
The U.S. reported 142,732 new cases of coronavirus Sunday and registered a record number of hospitalizations for the 13th straight day. Reported case counts are generally lower over the weekend, and the country's rolling seven-day average continues to climb.
In Europe, where authorities have taken a more stringent approach to stemming the second wave of coronavirus, restrictions are already taking their toll on the economy. Business activity has fallen so far this month, surveys of purchasing managers by IHS Markit showed Monday, with a particularly steep decline in France.
Seven of the S&P 500's 11 sectors gained Monday, with economically sensitive sectors like energy and financials among the strongest performers. Health-care and consumer-staples stocks slumped.
Energy stocks, which were badly hammered this year after Covid-19 led to a sharp slowdown in travel and business activity, have gotten a boost recently from a rebound in the price of oil.
Brent crude futures rose 2% to $45.84 a barrel, putting the oil benchmark on track for its highest settlement since early September. Crude prices rose Monday on reports that Yemen's Houthi rebels fired a missile at a Saudi Aramco distribution station in Jeddah, Saudi Arabia.
Cruise-line stocks and airlines were among the winners from Monday's vaccine news. Shares of Carnival gained 5%, while Royal Caribbean Group shares rose 4.7%. Delta Air Lines stock was up 4%.
AstraZeneca shares in London fell 3.8% as some investors appeared to be disappointed that its vaccine candidate fell short of the high effectiveness rates reported by Pfizer and Moderna.
Moderna shares gained 3.8%, while Pfizer stock declined 1%.
Overseas, the pan-continental Stoxx Europe 600 fell 0.2%. Asian markets were broadly higher, with China's Shanghai Composite Index climbing 1.1%.
In government bonds, the yield on 10-year Treasury notes ticked up to 0.852%, from 0.828% Friday. Yields rise when bond prices fall.
Write to Joe Wallace at Joe.Wallace@wsj.com and Alexander Osipovich at firstname.lastname@example.org
(END) Dow Jones Newswires