U.S. stocks jumped on Monday after Moderna said preliminary trial data showed its coronavirus vaccine was more than 94% effective.
The Dow Jones Industrial Average added 389 points, or 1.3%, and reached an intraday record. The S&P 500 rose 0.9% and the Nasdaq Composite climbed 0.7%.
Stocks that would benefit from the economy reopening led the way higher. United Airlines was up 5.3%, and Carnival traded 10.2% higher. Bank stocks such as JPMorgan Chase and Wells Fargo gained more than 2% each and Citigroup advanced nearly 4%. Moderna shares jumped 8.2% on the day.
The promising Moderna announcement makes the Massachusetts-based biotech firm the second drugmaker to say it has a potentially effective vaccine.
Similar trial results last week from Pfizer and BioNTech drove investors into underperforming names dependent on a vaccine reopening the economy. The companies said at the time that their candidate was more than 90% effective in preventing Covid-19 among participants.
A vaccine “turns what could have been a prolonged crisis into something closer to a natural disaster (large shock, swift recovery),” TS Lombard analysts Steven Blitz and Andrea Cicione wrote in a note. “Without an effective vaccine, current EPS consensus expectations (pointing to a return to trend by the end of next year) would be on the optimistic side. But with one, they may actually come to pass.”
Wall Street was coming off a mixed weekly performance in which beaten-down value names led the way higher at the expense of high-flying growth names. The Dow climbed 4% last week, and the S&P 500 notched a 2.2% one-week gain. The Nasdaq Composite lagged, however, sliding 0.6%.
The iShares Russell 1000 Value exchange-traded fund (IWD) rallied 5.7% last week while its growth counterpart, the iShares Russell 1000 Growth ETF (IWF) slid 1.2%. Value continued to outperform on Monday, with IWD gaining more than 1.6% and IWF advancing just 0.3%.
Medical syringe is seen with Moderna company logo displayed on a screen in the background in this illustration photo taken in Poland.
Jakub Porzycki | NurPhoto | Getty Images
Traders were also excited on Monday after Moderna said its vaccine remains stable at 36 to 46 degrees Fahrenheit, the temperature of a standard home or medical refrigerator, for up to 30 days. It can be stored for up to six months at negative 4 degrees Fahrenheit. By comparison, Pfizer’s vaccine requires a storage temperature of minus 94 degrees Fahrenheit.
To be sure, the number of coronavirus cases is still rising, thus threatening the prospects of a swift economic recovery.
More than 11 million Covid-19 infections have been confirmed in the U.S., according to data from Johns Hopkins University. Data from the COVID Tracking Project also showed that a record of more than 68,500 people in the U.S. are hospitalized with the coronavirus.
Dan Russo, chief market strategist at Chaikin Analytics, thinks the market can weather this latest spike in coronavirus cases, however.
“It seems that investors are more focused on vaccine news and are willing to look past the near-term spike in cases,” he said in a post. “If this becomes a cause for concern for investors, it will become apparent on the charts and risk management will take over.”
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