US Stocks Flirt With Record Level On Pfizer News

Oil prices soared and pushed up energy stocks while safe-haven US Treasuries sold off after US drugmaker Pfizer and its German partner BioNTech said a large-scale trial of their vaccine showed it was more than 90 percent effective in preventing Covid-19. Saturday's news that Joe Biden had won the US presidential election was also a reassuring confirmation of what investors had already been counting on by the end of last week, according to market strategists.

"Election uncertainty is fading into the rearview mirror. Now we have this boost of investor enthusiasm after the vaccine news," said to Michael Antonelli, market strategist at Baird in Milwaukee. "All the types of companies that would benefit from us returning to a pre-Covid world are the big winners today."

Sectors such as energy, travel and financials which were among the hardest hit by lockdowns aimed at curbing the virus were some of the biggest percentage gainers on Monday.

While the vaccine study is still ongoing and requires approval, Pfizer and BioNTech said they had found no serious safety concerns so far and expected to seek US emergency use authorization later this month.

"It's not that we're out of the woods with Covid. It's that the vaccine starts to remove the worst case scenario that we surge out of control and go back into a national lockdown," said Antonelli. "The market's looking into the future, to the first and second quarter of next year."

The Dow Jones Industrial Average rose 2.9 percent to 29,157, the S&P 500 gained 1.2 percent to 3,550 and the Nasdaq Composite dropped 1.5 percent, to 11,713.

The S&P energy index led gainers among the S&P 500's 11 major sectors and registered its biggest daily percentage gain in months as investors bet demand would climb again when people become more comfortable with the idea of traveling as the health crisis subsides.

Also, bank shares, often seen as a proxy for the broader economy, soared.

The companies hit hardest by months of travel bans and lockdowns surged. The NYSE airlines index was up 19 percent while plane maker Boeing jumped 15 percent. Cruise line operator Carnival Corp was up more than 32 percent.

In contrast, the technology sector and specific companies that had outperformed during the pandemic as they were seen as "stay-at-home" winners were making smaller gains or declining.

Netflix and Amazon declined while Zoom Video and exercise bike maker Peloton Interactive tumbled to limit the Nasdaq's advance.

"Stocks like tech are being served up as a form of proceeds to fund the purchase of pro-cyclical stocks that would stand to benefit from the economic reopening that could be accelerated by way of a vaccine," said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.

Stocks around the world had already been gaining ground before the vaccine data pushed equities even higher as expectations of better global trade ties and more monetary stimulus under US President-elect Biden was already lifting demand for risky assets.

Pfizer shares closed sharply higher after soaring as much as 15.4 percent during the session. But another drugmaker Biogen slumped as a panel of experts to the US health regulator voted against the drugmaker's experimental Alzheimer's treatment. (Reuters)