Wall Street rallied on Tuesday, with traders indicating a willingness to extend recent gains based on expectations that the deployment of a COVID-19 vaccine is imminent.
Encouraging developments in the fight against the coronavirus have put major benchmarks within view of recent record highs, and The Dow Jones Industrial Average is now within striking distance of the psychologically-charged 30,000 level, which would be a fresh record, and more than 10,000 points higher than the multi-year low reached during initial pandemic sell-off.
The technology-heavy Nasdaq, which have been beaten down as investors rotate out of “stay at home” stalwarts benefiting from coronavirus-related lockdowns, also posted strong gains. In early dealings, Tesla (TSLA) hit a new record high, and now has a market capitalization north of $500 billion — even before it joins the S&P 500.
Investors also cheered news that President-elect Joe Biden was poised to nominate former Federal Reserve Chair Janet Yellen — who is well regarded by Wall Street — as Treasury Secretary. Markets were also ticked higher on news that the Trump administration would formally begin the transition process, in spite of President Donald Trump’s faltering effort to challenge the vote in key swing states.
Although a relentless wave of new COVID-19 infections has crashed down on the global economy — driving up hospitalizations and deaths in its wake — major drugmakers have indicated that an inoculation is right around the corner.
On Monday, University of Oxford and AstraZeneca (AZN) revealed that their candidate demonstrated efficacy of 70.4% in two large-scale trails, If a lower dose is used, then a second, full dose, the efficacy is up to 90%, the company said.
However, AstraZeneca’s stock tumbled after one Wall Street analyst sharply questioned the efficacy of the inoculation, and raised questions about whether it would receive U.S. regulatory approval. Meanwhile, the U.S. plans to begin rolling out an antibody cocktail created by Regeneron (REGN) as early as Tuesday
“Risk bulls could be excused for being slightly disappointed with the reaction so far to the very positive Astra-Zeneca news on the vaccine,” wrote Alan Ruskin, macro strategist at Deutsche Bank, in a research note on Monday.
Citing the market’s reaction to previously encouraging vaccine news, Ruskin posed a question: “Is a vaccine largely priced? The short answer is no.”
In the immediate term, Ruskin said that some market bets are “starting to struggle. However, if the vaccines fulfill their promise, their impact would dominate the real economic landscape for the next 18 months at least,” he added. A fully inoculated public would be beneficial to beaten-down industries like travel, leisure and entertainment — all of which have been devastated by COVID-19 social distancing protocols.
The AstraZeneca news came on the heels of Pfizer (PFE) and BioNTech (BNTX) announcing plans to file for an emergency use authorization with the U.S. Food and Drug Administration, which would allow them to have their vaccine used in the U.S. starting in December.
Expectations for a relatively quick vaccine rollout have prospects for 2021 growth, while leading investors to unwind technology-heavy “stay at home” bets that previously bolstered key stocks like Netflix (NFLX), Amazon (AMZN), Zoom (ZOOM) and other names. Both the Dow (^DJI) and S&P 500 (^GSPC) notched record closing highs last week, as traders rode a wave of exuberance sparked by the vaccine news.
However, the near term outlook remains clouded by the relentless scourge of more COVID-19 infections, and the inability of Washington’s warring parties to agree on stimulus. The current wave of the virus is swamping the darkest days of March and April, threatening to overshadow the holidays and drag on growth.
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9:30 a.m. ET: Stocks power higher, Dow zeroes in on record
Here were the main moves in markets as of 9:30 a.m. ET:
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S&P 500 (^GSPC): 3,603.59, +26.00 (+0.73%)
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Dow (^DJI): 29,887.15, +295.88(+1.00%)
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Nasdaq (^IXIC): 11,927.35, +46.72 (+0.39%)
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Crude (CL=F): $43.80 per barrel, +$0.74 (+1.72%)
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Gold (GC=F): $1,803.00, -$34.80 (-1.89%)
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10-year Treasury (^TNX): +0.015 basis points to yield 0.872
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7:20 a.m. ET Tuesday: Stock futures rip higher, point to rally at the open
Here were the main moves in equity markets, as of 7:20 a.m. ET Tuesday:
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S&P 500 futures (ES=F): 3,601.50, +25.50 (+0.71%)
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Dow futures (YM=F): 29,833.00, +287.00 (+0.97%)
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Nasdaq futures (NQ=F): 11,942.75, +37.50 (+0.31%)
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6:30 p.m. ET Monday: Stock futures add to gains
Here were the main moves in equity markets, as of 6:30 p.m. ET Monday:
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S&P 500 futures (ES=F): 3594.50, +18.50
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Dow futures (YM=F): 29717, +171
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Nasdaq futures (NQ=F): 11953.50, +48.25
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