Stocks rallied Monday as investors cheered news that the Food and Drug Administration granted “fast track” status to a pair of vaccine candidates produced by Pfizer Inc. and German biotech firm BoNTech SE. The upbeat mood on Wall Street comes even as investors prepare for a tough earnings season.
What are major benchmarks doing?
The Dow Jones Industrial Average
rose 414 points, or 1.6%, to 26,493. The Nasdaq Composite
jumped 192 points, or 1.8%, to 10,809, setting a new intraday record at the start of trading. The S&P 500
added 43 points, or 1.4%, to 3,228. The S&P 500 is less than 0.10% away from erasing its year-to-date losses at its best levels of the session.
Stocks rose in thin trade last week, with tech stocks firmly in the lead. The Nasdaq on Friday scored its third consecutive record close and logged a 4% weekly rise ending Friday at 10617.44. The Dow saw a 1% weekly rise to 26,075.30, while the S&P 500 advanced 1.8% for the week to 3,185.04. Friday’s session, meanwhile, saw the lowest daily volume since Feb. 21, according to Dow Jones Market Data.
What’s driving the market?
Technology and tech-related companies led the charge on Monday, consolidating the dominance of the Nasdaq Composite in this year’s stock-market rally. The Nasdaq is up more than 20% in 2020, even as the S&P 500 was modestly positive.
“The pandemic has accelerated many of the existing trends and brought it forward,” said Stephen Dover, head of equities at Franklin Templeton, in a webinar.
Bolstering the market bulls, Pfizer Inc.
and BioNTech SE
announced that two of their COVID-19 vaccine candidates received Fast Track status from the Food and Drug Administration. Pfizer’s shares were up 4.7%, while BioNTech’s stock gained more than 13%.
Meanwhile, earnings season is set to kick off this week. The bar has been set remarkably low as investors largely write off second-quarter earnings, devastated by the pandemic. That’s why analysts will be watching results for clues to a third- and fourth-quarter rebound that skeptics say might be difficult to fulfill if the coronavirus spread continues unabated.
The aggregate blended year-over-year growth estimate for earnings per share, which includes some earnings already reported and the average analyst estimates of coming results, is negative 44.6% as of Monday morning, according to FactSet.
Overall, stocks have shaken off a renewed rise in the number of coronavirus cases, which have surged across much of the Sun Belt, though analysts have warned that the resurgence threatens to slow if not derail the rebound in economic activity if officials reinstate lockdown measures.
Investors have also largely brushed aside the threat of renewed U.S.-China tensions. President Donald Trump on Friday said there was no scope for a phase-two agreement on trade between the two countries, saying Washington’s relationship with China had been “severely damaged” by the coronavirus pandemic, which the administration has sought to blame on Beijing. China’s move to crack down on Hong Kong with the passage of strict new national security laws has also raised tensions.
China on Monday said it would bar entry to the country by U.S. Sens. Marco Rubio and Ted Cruz, Rep. Chris Smith and Ambassador for Religious Freedom Sam Brownback over their criticism of the ruling Communist Party’s policies toward minority groups and people of faith. The move comes after Washington last week sanctioned senior Chinese Communist Party officials over alleged human-rights abuses in western China.
Instead, investors have paid closer attention to Chinese equities, which have surged to the approval of Chinese authorities and have appeared to help spark global equity gains.
New York Fed President John Williams is scheduled to deliver a video speech on the shift away from Libor at a Bank of England/ New York Fed conference at 11:30 a.m. Eastern, while Dallas Fed President Robert Kaplan is due to deliver a speech at the National Press Club at 1 p.m. Eastern
Which companies are in focus?
- Shares of PepsiCo Inc.(TICKER:PEP) rose 2.4% after the beverage and snack giant reported second-quarter profit and revenue that declined less than expected thanks to a resilient snacks and food business amid the COVID-19 pandemic.
- Analog Devices Inc.
In deal news, chip maker on Monday said it had agreed to acquire Maxim Integrated Products Inc.
in an all-stock deal with a combined enterprise value of over $68 billion. Shares of Analog Devices rose 1.1%, while Maxim shares were up nearly 15%.
- AMCEntertainment Holdings Inc.’s shares
rose 3.4% after the owner of the world’s biggest cinema chain said it had reached an agreement to reduce its debt by at least $460 million and has secured $300 million in new funding.
- Energy Acquisition Corp.
Electric-vehicle maker Fisker Inc. is going public, through a reverse merger with a blank-check company Spartan sponsored by private-equity firm Apollo Global Management. Shares of surged 13%.
- Tesla Inc.
Shares soared 12%, pushing its market capitalization to more than $320 billion.
What are other markets doing?
In Asia, the Shanghai Composite
rose 1.8%, while the CSI 300 Index
advanced 2.1%. Japan’s Nikkei 225 Index
rose 2.2%, while the Hang Seng Index in Hong Kong
edged up 0.2%.
The yield on the benchmark 10-year Treasury note
was up nearly 3 basis points to 0.66%. Yields and bond prices move in opposite directions. The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, was off 0.2%.
Oil futures were under pressure, with the U.S. benchmark
down 0.3% to $40.43 a barrel after The Wall Street Journal over the weekend said Saudi Arabia was pushing OPEC and its allies to ease production curbs beginning in August. Gold
futures were higher, trading up 0.9% to $1,817.30 an ounce.