Stocks Open Higher on Covid-19 Vaccine Results
24 November 2020 - 2:02AM
Dow Jones News
By Joe Wallace
U.S. stocks rose in early trading Monday, putting Wall Street on
the front foot after promising results on a Covid-19 vaccine
bolstered hopes for an economic rebound in 2021.
The S&P 500 climbed 0.6%, after the benchmark stocks gauge
snapped a two-week winning streak on Friday. The Nasdaq Composite
Index also gained 0.6%, while the Dow Jones Industrial Average
advanced 0.6%, or 184 points.
The University of Oxford and AstraZeneca said their vaccine was
found to be as much as 90% effective in preventing infections
without serious side effects in a large trial. The results added to
optimism among investors that the deployment of effective vaccines
can help bring coronavirus under control next year, allowing
beaten-down sectors of the economy to recover.
"When you look into the details, it looks like very good news,"
said Paul O'Connor, head of multi asset at Janus Henderson
Investors. Unlike shots under development from Pfizer and Moderna,
AstraZeneca's vaccine can be stored at temperatures above zero
degrees Celsius, easing the distribution process, Mr. O'Connor
said.
Pfizer and partner BioNTech on Friday asked the U.S. Food and
Drug Administration to clear the companies' Covid-19 vaccine, and
said that distribution could potentially begin mid-December.
Shares in economically-sensitive energy producers and banks were
among the best performers in Europe. The Stoxx Europe 600 wavered.
Shares in AstraZeneca slipped 2.6%.
"There's a growing prospect of a significant normalization of
economic activity in the second half of next year," said Mr.
O'Connor. Still, he added that much of the vaccine optimism was
already baked into stock prices, and thinks the current surge of
coronavirus is likely to weigh on economic growth in the U.S. in
the coming months.
The promising outlook for a third Western vaccine added to
recent pressure on the dollar, pushing the ICE Dollar Index to its
lowest level since April 2018.
Investors are shifting money from the U.S. toward other markets
that stand to benefit from a revival of the world economy, said
Georgette Boele, senior foreign-exchange strategist at ABN Amro
Bank. Signals that the Federal Reserve will keep short-term
interest rates on hold at low levels have taken the shine off the
U.S. bond market, further weighing on the greenback, Ms. Boele
added.
Ahead of the bell in New York, shares in Regeneron
Pharmaceuticals rose 3.3% after the FDA cleared the company's
antibody drug cocktail for use treating mild to moderate Covid-19
patients.
Merck shares gained 1.6% after the drugmaker said it was buying
the biopharmaceutical company OncoImmune, which has reported
positive results from a late-stage study of a coronavirus treatment
candidate, for $425 million.
Investors will get an early look at how the wave of infections
is affecting the manufacturing and services sectors when surveys of
purchasing managers are released at 9:45 a.m. ET. The preliminary
data for November are expected to show that activity in the
services sector continued to grow, but at a slower pace than last
month.
The U.S. reported 142,732 new cases of coronavirus Sunday and
registered a record number of hospitalizations for the 13th
straight day. Reported case counts are generally lower over the
weekend, and the country's rolling seven-day average continues to
climb.
In Europe, where authorities have taken a more stringent
approach to stemming the second wave of coronavirus, restrictions
are already taking their toll on economy. Business activity has
fallen so far this month, surveys of purchasing managers by IHS
Markit showed Monday, with a particularly steep decline in
France.
In government bonds, the yield on 10-year Treasury notes ticked
up to 0.852%, from 0.828% Friday. Yields rise when bond prices
fall.
Asian markets broadly climbed, with China's Shanghai Composite
Index ending 1.1% higher. South Korea's Kospi advanced 1.9% after
government data showed exports rose 11% in the first 20 days of
November, a boost for the trade-reliant economy.
Brent-crude oil futures rose 1.4% to $45.57 a barrel, putting
the international energy benchmark on track for its highest
settlement since early September.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
November 23, 2020 09:47 ET (14:47 GMT)
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