What’s happening: US stocks closed higher on Monday following encouraging news on the development of another covid-19 vaccine.
What happened: AstraZeneca became the latest drug manufacturer to announce encouraging results from its vaccine study.
Although Wall Street rallied on the news, investors sold AstraZeneca’s shares after comparing the efficacy data with that of its rivals. Markets also cheered news of the FDA allowing emergency use of the covid-19 treatment by Regeneron Pharmaceuticals.
Why it matters: With the string of positive news around covid-19 vaccine development, investors saw light at the end of the tunnel for the global economy. Many countries around the globe have been forced to retract their reopening moves amid a resurgence of infections.
Markets received a boost from AstraZeneca’s announcement that its vaccine candidate is around 90% effective in preventing covid-19. Despite this positive news, the company’s shares tumbled more than 1% as its efficacy data was disappointing when compared with around 95% efficacy rates reported by Pfizer and Moderna on their respective covid-19 vaccine candidates.
Investor sentiment had already been elevated by the US FDA (Food and Drug Administration) issuing emergency use authorization over the weekend to Regeneron Pharma’s covid-19 treatment, which was used to treat President Donald Trump when he tested positive last month.
The IHS Markit also reported that their manufacturing and services PMIs had climbed to multi-year highs for November, further boosting hopes of a sharper economic rebound.
The S&P 500 closed higher by 0.56% on Monday, with energy stocks recording sharp gains as the launch of a vaccine is likely to boost oil demand. US crude oil surged more than 2% in the previous session.
Several companies that are expected to benefit from a vaccine spiked on Monday, as a vaccine will allow people to get back to their normal lives, traveling, shopping, and eating out. Shares of cruise line operator Carnival climbed around 5%, while Marriott International’s shares rose more than 3% on Monday.
The Dow Jones climbed around 328 points to close at 29,591.27 on Monday. However, the tech-laden Nasdaq 100 gained only 0.2% to close at 11,880.63, as tech shares remain elevated following their recent strong run.
What to watch: Investors will keep an eye on the developments related to the approval and launch of a covid-19 vaccine and its availability by the end of this year. The rising infections will remain in focus, with total cases exceeding 12.3 million in the US.
Markets await a basket of economic reports from the US, with the S&P CoreLogic Case-Shiller home price index expected to rise 5.1% in September, while the FHFA house price index projected to increase 1.1%. The Conference Board’s consumer confidence index is expected to decline to 98 in November, from a previous reading of 100.9.