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Topline

Moderna’s promising coronavirus vaccine news has added fuel to the stock market rotation that began last week after Pfizer issued similar news about its drug; investors are plowing into value stocks that have tanked during the pandemic while shunning the broader tech market and selling off pandemic market favorites like Zoom, Peloton and Clorox.

Key Facts

Shortly after the opening bell, the Dow Jones Industrial Average was surging 400 points, or 1.4%, and the S&P 500 was up 0.6% after closing at a record high on Friday, while the tech-heavy Nasdaq, whose vaccine-related performance has deviated from the broader-market indexes, was virtually flat.

Moderna said Monday morning that its Covid-19 vaccine candidate is 94.5% effective in preventing the disease, sending its own shares soaring 14% on Monday and boosting year-to-date gains to nearly 370%.

Among the morning’s other biggest stock gainers were firms in real estate, energy and cruises, with Norwegian Cruise Line surging 12% and commercial real estate owner SL Green Realty soaring 10%, while Carnival, Royal Caribbean and Marathon Oil all jumped roughly 8%.

Meanwhile, stocks lagging the broader market included many pandemic outperformers such as Clorox, Peloton and Zoom–down 2%, 3.5% and 4%, respectively.

On the earnings front, Chinese e-commerce giant JD.com reported third-quarter revenue and earnings that beat analyst expectations even after China lifted coronavirus lockdowns, while mattress-maker Casper Sleep failed to meet estimates, blaming Covid-induced supply chain disruptions.

Global markets also ticked higher after the announcement: The United Kingdom’s FTSE 100 climbed 1.9%, and France’s CAC 40 jumped 2%, while Hong Kong’s Hang Seng Index, which closed before Moderna’s announcement, edged up nearly 0.8%.

Crucial Quote 

“The Moderna efficacy is impressive, but not that different from Pfizer’s,” says Vital Knowledge Media Founder Adam Crisafulli, adding that what’s most significant about Moderna’s announcement is that its vaccines have significantly less stringent cold-storage requirements than Pfizer’s. “Growth stocks massively underperformed value last week, and this price action should continue for the foreseeable future,” he adds, noting that one factor “working against growth and momentum stocks–as well as pandemic winners like essential retail–are difficult growth comparisons that start to kick-in around March and April of 2021.”

What To Watch For

It’s a big week for earnings, with Nasdaq-listed Chinese tech giant Baidu reporting Monday after the market close, and Home Depot, Walmart and Kohl’s all reporting Tuesday. That’s followed by Lowe’s, Target, Nvidia and TJMaxx on Wednesday, while Intuit, Macy’s and Foot Locker are all later in the week. On the vaccine front, Crisafulli notes that “the next major Covid catalysts will be the FDA hanging out emergency use authorizations for the Pfizer and Modern vaccines,” as well as preliminary data from the AstraZeneca and Johnson & Johnson trials due out in December.

Tangent

Spanish banking monolith BBVA announced Monday morning that it’s selling its U.S. regional bank business to Pittsburgh-based PNC for $11.6 billion, marking one of the largest acquisitions in the financials space announced during the pandemic. Shares of PNC are up more than 2% after the opening bell.

Further Reading

Moderna’s Covid-19 Vaccine Is More Than 94% Effective, Preliminary Data Shows (Forbes)

SEC Chair Jay Clayton Will Step Down By The End Of 2020 (Forbes)

S&P 500 Closes At All-Time High After Roller-Coaster Week (Forbes)

Billionaire Bill Ackman: Covid Will Get ‘Ugly’ In Next Few Months, But Expect ‘Explosive Growth’ Once It’s Over (Forbes)