Stocks soar to record high as Pfizer reports promising vaccine results

Stocks soared to new highs in earlier day trading after Pfizer said Monday that its latest data show that the drugmaker’s coronavirus vaccine is highly effective. Investors also breathed a sigh of relief after days of U.S. presidential limbo ended with Democrat Joe Biden declared the president-elect on Saturday.

The Dow jumped more than 1,700 points, or 6%, to 29,836 earlier in the session, topping its previous intra-day high of 29,569. Over the rest of the day, the blue-chip index shed roughly half those gains to close at 29,158, up 835 points, or 3%. The S&P 500 added 41 points, or 1.2%, while the tech-heavy Nasdaq initially surged before falling 1.5%.

By contrast, Amazon, Netflix, Peloton Interactive, Zoom Video Communications and other companies that have soared during the pandemic as millions of Americans worked and shopped from home saw their shares sag.

Markets were already sharply higher on the U.S. election result when Pfizer said that data shows vaccine shots may be 90% effective at preventing COVID-19, indicating the company is on track this month to file an emergency use application with U.S. regulators. Any economic recovery depends on checking the pandemic, and investors pounced upon the news. 

“If the Pfizer Covid vaccine turns out to be the real deal, then this is a game-changer,” Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance, told investors in a note.

Pfizer says its COVID vaccine is 90% effectiv… 03:48

Pfizer, which is teaming with with German biopharmaceuticals firm BioNTech to develop the vaccine, plans to apply for Emergency Use Authorization from the FDA as soon as final data meets safety milestones, which it expects to happen in the third week of November.

The announcement comes as cases are flaring across the nation. “The U.S. had five record-breaking single-day identified case counts this week that surpassed six-digit numbers for the first time recorded bringing the U.S. to 10 million cases,” said Raymond James analysts in a Monday report. 

They added, “The third surge keeps rising with no signs of slowing down. In fact, fall festivities are causing it to accelerate, and we anticipate the coming holidays will further exacerbate the spread.

Election response

Markets were already buoyant about the result of the U.S. elections, which saw Biden win the presidency.

“This means less uncertainty, less turmoil in terms of foreign relations, and reversal of some futile policies which were put by the Trump administration,” Naeem Aslam, chief market analyst at Ava Trade, said in a commentary.

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 President Donald Trump on U.S. trading partners, especially China, in the past several years.

Trump to file more voter fraud lawsuits 03:29

The European Union pressed ahead Monday with plans to impose tariffs and other penalties on up to $4 billion worth of U.S. goods and services over illegal American support for plane maker Boeing. That followed a World Trade Organization ruling in the U.S.’s favor over EU support for Airbus.

For now, investors seem inclined to shrug off Trump’s refusal to concede and threats of legal action. With Republicans expected to retain their grip on a majority in the Senate, they are betting on continuity in tax, regulatory and other policies, analysts said.

“Trump not conceding a loss is near-term noise looking to wrong-foot Biden at the start of his presidency while Republicans in a position to not concede ground on legislation may continue to frustrate Biden’s agenda,” Mizuho Bank said in a commentary.

Chances of more stimulus?

If Republicans remain in charge of the Senate, chances for a big package of economic aid are weaker, and the Federal Reserve will likely need to step up with more support, said Jeffrey Halley of Oanda.

A Nation In Need: A Stimulus Checklist 38:29

“More easing is almost certainly on the way at December’s FOMC meeting,” Halley said, referring to the Fed’s policy making committee. “Looser monetary policy equals higher asset prices in a zero percent interest rate world.”

Biden has vowed to move decisively to try to counter the worsening coronavirus pandemic, which has sapped economic growth, trade and travel, as the U.S. and Europe face a troubling rise in infections. Even if the strictest lockdowns don’t return in the United States, the worsening pandemic may dampen consumption and erase profits.