A new coronavirus stimulus deal is still in the works between Democrats and Republicans, bu they can’t agree on a conclusion. USA TODAY
U.S. stocks surged Monday after Pfizer said its experimental vaccine was more than 90% effective in preventing COVID-19, a potentially huge boost to world health after the pandemic battered the global economy in the spring and led to more than one million deaths.
The Dow Jones industrial average soared 1,400 points on the news, after futures were already up 400 points overnight following Democrat Joe Biden’s defeat of incumbent Donald Trump in the U.S. presidential election. The gains helped put the blue-chip average on track to close at a record, topping its Feb. 12 high before the pandemic rattled financial markets around the world.
The S&P 500 jumped 3.2%, also on pace to finish at a fresh all-time high, after the broad index posted its best week since April following an election-fueled rally last week. Industries tied to the economy reopening rallied following the developments, including airlines, casino and restaurant companies while technology shares fell.
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Global markets were buoyed after Pfizer and German partner BioNTech released early study results Monday indicating that their vaccine, BNT162b2, prevented more than 90% of infections from the virus that causes COVID-19.
Pfizer is the first drug company to release data from a large, Phase 3 trial as it and several other companies are working to produce a COVID-19 vaccine that is safe and effective.
Any economic recovery depends on checking the pandemic, and investors pounced upon the news. Pfizer’s data is only preliminary and does not mean a vaccine is imminent. Getting the vaccine to billions of people will be a massive undertaking, even if it is approved.
“For the first time we can see a light at the end of the tunnel and a return to ‘normalcy’ seems likely within 2021,” Steven Seedhouse, analyst at Raymond James, said in a note. “It all depends on scaling manufacturing for this and subsequent vaccines that we expect to work.”
The vaccine news comes as the country’s new coronavirus cases are setting records once again. The U.S. recorded 126,742 cases Saturday, the third day in a row the total exceeded 120,000, according to data from Johns Hopkins. The United States, with about 4.3% of the world population, has about 20% of the cases.
Global markets were jolted higher in Asia and Europe overnight as investors breathed a sigh of relief after days of U.S. presidential limbo ended with Biden declared the president-elect. Stocks had rallied last week on the prospect for more gridlock in Washington.
The upside of a split Congress for markets is that it may prevent Democrats from approving some of the measures investors feared, such as higher tax rates and tougher antitrust policies for big technology companies.
“The election outcome is arguably the most favorable scenario for investors. A split congress or even a blue sweep with a very marginal majority implies that neither large tax hikes nor major changes in regulation are likely,” Seema Shah, chief strategist at Principal Global Investors, said in a note.
Many analysts expect trade tensions to de-escalate under a Biden presidency. Still, not all trade tensions are expected to vanish even if Biden rolls back some of the tariffs imposed by Trump on U.S. trading partners, especially China, in the past several years.
On Monday, Delta Air Lines surged 16% and Las Vegas Sands jumped 12%. Technology stocks, which have thrived in a stay-at-home economy and propelled the market higher last week, slumped with Zoom down 12%. Netflix and Amazon fell 5% and 3%, respectively.
“We want to go back to work, school and socializing in business and family life and this means a slow down for most stay-at-home stocks,” James McDonald, CEO and chief investment officer of investment manager Hercules Investments, said in a note. “Stocks like Zoom and Netflix will be long-term winners, but will lose in the short-term as their valuations ran ahead of actual earnings.”
In energy trading, U.S. benchmark crude gained $3.16 to $40.30 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose $3.08 to $42.53 a barrel.
In Europe, France’s CAC 40 jumped 5.6% to 5,239, while Germany’s DAX surged 5.1% to 13,112. Britain’s FTSE 100 gained 4% to 6,145.
In Asian trading, Japan’s Nikkei 225 surged 2.1% to finish at 24,839.84. Australia’s S&P/ASX 200 added 1.8% to 6,298.80. South Korea’s Kospi advanced 1.3% to 2,447.20. Hong Kong’s Hang Seng rose 1.2% to 26,016.17, while the Shanghai Composite gained 1.9% to 3,373.73.
Contributing: The Associated Press
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