Dow soars 375 points to near-record as Moderna's vaccine update boosts investor optimism

Brendan McDermid/Reuters
  • US equities soared on Monday after Moderna’s encouraging vaccine update lifted hopes for a complete economic recovery.
  • Moderna announced Monday that its experimental coronavirus vaccine was 94.5% effective at preventing COVID-19 in trial patients. Moderna plans to apply for emergency use authorization later this month.
  • Both the S&P 500 and Dow Jones industrial average opened within 1% of all-time highs.
  • The news specifically lifted so-called reopening stocks including airlines, hotels, and cruises.
  • Stay-at-home plays such as Zoom and Netflix tumbled.
  • Oil prices surged as investors bet on vaccine distribution to revive market demand. West Texas Intermediate crude gained as much as 4.9%, to $US42.09 per barrel.
  • Watch major indexes update live here.

US stocks rallied on Monday after Moderna announced its coronavirus vaccine candidate reliably protected patients from COVID-19. Both the S&P 500 and Dow Jones industrial average opened within 1% of all-time highs following the results.

The biotech company said Monday morning that its experimental vaccine was 94.5% effective at preventing COVID-19 in trial patients. An independent group of experts found signs of effectiveness after reviewing data from an ongoing 30,000-person trial, Moderna said. The company plans to apply for emergency use authorization later this month.

The encouraging news comes one week after Pfizer and BioNTech revealed similarly positive results from their own vaccine trial. While both experimental drugs still require regulatory approval to be distributed, their effectiveness suggests the virus could be reliably contained sooner than expected.

Here’s where US indexes stood shortly after the 9:30 a.m. ET market open on Monday:

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The so-called reopening trade soared as Moderna’s update lifted investor optimism. Airlines including United,American, and Delta gained, as did cruise lines. Hotel stocks also jumped as investors bet on near-term vaccine distribution to revive the beleaguered sector.

Conversely, stocks that thrived in the stay-at-home economy sank as investors positioned for a full recovery. Zoom,Netflix, and Peloton, among others, tumbled. Falling tech giants in particular led the Nasdaq composite to underperform peer indexes.

“The global population couldn’t have asked for more from the Moderna vaccine,” Seema Shah, chief strategist at Principal Global Investors, said. “Visibility towards a return to normality is increasing, and this should provide more fuel to the reflation rally, with small caps, value, and cyclicals clear beneficiaries.”

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Moderna’s update offset concerns about still-rising COVID-19 cases throughout the US. The country reported more than 139,000 new cases on Sunday along with nearly 69,000 new hospitalizations, according to The COVID Tracking Project. Multiple cities have reinstated economic restrictions to hinder the virus’s spread. With the pace of economic recovery already slowing, prolonged lockdowns risk freezing the nation’s rebound.

Monday’s strong open comes after Pfizer’s own vaccine announcement spurred a massive rotation to value stocks throughout last week. Major indexes notched a second-straight weekly gain as investors bet on near-term vaccine distribution.

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Spot gold fell slightly after hitting an intraday low of $US1,865.30 per ounce as investors rotated out of safe-haven assets. The US dollar declined against most major currency peers and Treasury yields climbed.

Bitcoin hovered around $US16,400 as its recent rally cooled. The world’s most popular cryptocurrency surged above the $US16,000 resistance level on Thursday as its fall rally pushed forward.

Oil prices gained on hopes for a vaccine to revive travel activity and overall consumption. West Texas Intermediate crude surged as much as 4.9%, to $US42.09 per barrel. Brent crude, oil’s international standard, rose 4.4%, to $US44.67 per barrel, at intraday highs.

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