Stocks rose at the start of Monday’s trade after Moderna Inc. said its vaccine candidate proved highly effective in preventing COVID-19 infections, while investors looked past a continued surge in new cases of the disease and the lack of progress toward another round of aid for strapped households.
The Moderna news comes just a week after Pfizer Inc.
PFE,
and BioNTech SE
BNTX,
announced an efficacious COVID-19 vaccine candidate, sparking an equity rally and a violent rotation out of stocks that have benefited from the stay-at-home environment created by the pandemic in favor of stocks that have been left behind.
What are major benchmarks doing?
The Dow Jones Industrial Average
DJIA,
advanced 339 points, or 1.2%, to 29,818. The S&P 500
SPX,
gained 23 points, or 0.7%, to 3,608. The Nasdaq Composite
COMP,
rose 58 points to 11,887, turning up early Monday after starting the day near the flatline.
The small-cap Russell 2000
RUT,
rose 2%.
Stocks closed with strong gains Friday, pushing the S&P 500 to its first record close since Sept. 2 and the Russell 2000
RUT,
to its first record since 2018. A rotation away from large-cap tech juggernauts that have been the main beneficiaries of the work-from-anywhere phenomenon saw the Nasdaq Composite lag behind as investors rotated into stocks and sectors left behind by the pandemic.
For the week, the Dow rose 4.1% to end Friday at 29,479.81, just 0.2% shy of its record close of 29,551.42 set on Feb. 12. The S&P 500 rose 2.2% last week to end Friday at 3,585.15, while the Nasdaq fell 0.6% for the week, ending Friday at 11,829.29.
What’s driving the market?
Moderna
MRNA,
said its COVID-19 experimental vaccine cut COVID-19 infections by 94.5%. The company said it plans to submit an Emergency Use Authorization with the U.S. Food and Drug Administration in the coming weeks. Moderna shares jumped around 9%.
Last week’s rally was inspired after Pfizer and BioNTech SE on Nov. 9 announced that their vaccine candidate was more than 90% effective in preventing COVID-19 infections in a late-stage trial.
Positive news on the vaccine front has given investors “more certainty that the pandemic will come to an end as soon as next year,” said Hussein Sayed, chief market strategist at FXTM, in a note.
The U.S. counted 135,187 new cases on Sunday, and at least 623 people died, according to a New York Times tracker. In the past week, the U.S. has averaged 150,265 cases a day, up 81% from the average two weeks ago and cases are rising in 50 states and territories.
While tech shares and other stay-at-home beneficiaries have lagged, hard-hit industries and sectors, including airlines, energy, financials and retail, benefited last week. Whether the rotation will continue over the short run is debatable, Sayed said, but argued there is “good value” in holding cyclical and economically sensitive stocks over the longer term.
“When combining the impact of a vaccine with continued fiscal and monetary support, earnings will possibly grow by double digits in 2021 compared to the tech industry which will struggle to beat their 2020 performance,” he said.
Deal-related news was also in focus, PNC Financial Services Group Inc.
PNC,
agreed to buy the U.S. arm of Spain’s BBVA in an $11.6 billion transaction, the companies said Monday, in one of the largest bank tie-ups since the financial crisis. PNC shares rose 2.4%, while BBVA shares surged over 18%.
Meanwhile, investors looked past a stalled transition as President Donald Trump continued to refuse to accept the results of the Nov. 3 presidential election.
Trump early Sunday tweeted what appeared to be a tacit acknowledgment that Biden had won the election, but repeated his claim, without evidence, that the election had been rigged. Federal agencies have described the voting process as the most secure in election history. Trump subsequently tweeted that he had not conceded.
In economic data, the New York Federal Reserve Bank’s Empire State index came in at a reading of 6.3 from 10.5 in October.
Which companies are in focus?
-
Tyson Foods Inc.
TSN,
stock rose 1.9% after the meat manufacturer reported fiscal fourth-quarter earnings that beat expectations and declared a dividend for fiscal 2021. -
Hilton Worldwide Holdings Inc.
HLT,
said Monday it plans to offer $1 billion worth of senior notes to redeem previously issued debt. The stock rallied 1%. - High-end mall developer Taubman Centers Inc. agreed to accept a price cut in its takeover by Simon Property Group Inc. SPG, in a move that will allow the companies to avoid a drawn-out legal battle that was set to kick off on Monday. Simon will pay $43 a share for Taubman under the new deal, they said Sunday. That is down from the original price of $52.50. Simon shares rose more than 8%, while Taubman shares climbed 8.3%.
-
Casper Sleep Inc.
CSPR,
shares fell 15% after the mattress-in-a-box seller saw a wider-than-expected third-quarter loss on revenue that declined unexpectedly, citing supply chain challenges given as a result of the COVID-19 pandemic.
How are other assets trading?
The yield on the 10-year Treasury note
TMUBMUSD10Y,
rose 1.6 basis points to 0.909%. Bond prices move in the opposite direction of yields.
The ICE U.S. Dollar Index
DXY,
,
a gauge of the greenback’s strength against its major rivals, was up less than 0.1%.
The pan-European Stoxx 600 index
SXXP,
rose 1.5%, while the U.K.’s FTSE-100 index
Z00,
climbed 1.6%.
Crude-oil futures rose, with the U.S. benchmark
CL.1,
up 4.2% to trade at $41.82 a barrel. Meanwhile, trading in gold
GCZ20,
was muddled, falling $1.50 to $1,884.70 an ounce.