What’s happening: The Dow Jones index jumped more than 800 points on Monday following an encouraging covid-19 vaccine update and Joe Biden’s victory in the US Presidential election.
What happened: Pharma giant Pfizer, which has partnered with German biotechnology company BioNTech to develop a covid-19 vaccine, announced positive interim data from a late-stage study.
The news lifted investor sentiment, as did the end of uncertainty surrounding the US Presidential election. Although the Dow recorded its highest single-day surge since June 5, the tech-laden Nasdaq 100 settled lower after turning negative during the afternoon session.
Why it matters: Risk appetite had improved over the weekend, with assets viewed as risky surging even before the opening bell on Monday, as ex-Vice President Joe Biden garnered enough votes to win the race to the White House.
Markets seemed unmoved by incumbent President Donald Trump’s appeals for a recounting of votes in various states, while President-elect Joe Biden announced a taskforce to handle the pandemic with the case count in the country surpassing 10 million.
Cyclical sectors, which had tumbled amid the pandemic, added gains on Monday on news of Pfizer and BioNTech achieving success for their coronavirus vaccine candidate BNT162b2, which was found to be over 90% effective in helping prevent covid-19 in healthy trial participants.
Following the achievement of the latest safety and efficacy milestone, the companies said they expect to file for EUA (Emergency Use Authorisation) with the US FDA (Food and Drug Administration) by the third week of November.
While the Dow and S&P 500 moved higher after the news, a wide sell-off in tech stocks pushed the Nasdaq 100 to the red. Investors seem to have disposed of tech shares that had achieved new highs during the pandemic to invest in more reasonably priced stocks that could benefit from an economic recovery.
Airline and cruise stocks spiked, led by gains in the shares of American Airlines, Delta Air Lines, Boeing, Royal Caribbean, and Carnival.
The Dow Jones index climbed 834.57 points, or 3%, to settle at 29,157.97, recording its best single-day percent rise since June 5. The S&P 500 also added 1.2% to finish the trading day at 3,550.50, booking its second highest close since September 2.
Although the Nasdaq 100 began the trading day on a positive note, it turned lower during the afternoon session and ended trading with 11,713.78 points, representing a 1.5% decline. The tech index was down 2.8% from its record closing on September 2.
What to watch: Markets will be keeping a close eye on further news from Pfizer and BioNTech on their covid-19 vaccine candidate and the data due for release in the third week of November. Investors also await news of a fresh stimulus package following Biden’s win as President. With the US recording new record highs in coronavirus daily cases, investors may respond positively to any update by the Biden administration’s taskforce on attempts to curb the pandemic.