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Latest Vaccine News Gives Wall Street Something to Celebrate

Markets seemed pleased by the call that Joe Biden would be the 46th U.S. president, but they became ecstatic over promising vaccine news Monday morning.

MANHATTAN (CN) — The big news over the weekend that Joe Biden would be the 46th president of the United States Markets had already put markets afloat, but Pfizer’s follow-up on a Covid-19 vaccine sent them to cloud nine.

Early Monday morning Pfizer and BioNTech announced that their vaccine candidate was more than 90% effective in preventing Covid-19 infection. After the announcement, futures on the Dow Jones Industrial Average, which were already pointing to a positive Monday opening, shot up 1,500 points.

Pfizer noted that it could not apply for FDA Emergency Use Authorization based solely on the efficacy results, but the news is certainly welcome for markets, which many analysts said would not truly return to normal until an effective vaccine was made available. 

“This hopefully is the beginning of the end of our fight against Covid,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group in an early investor’s note. 

At the opening bell, the Dow hurdled 1,570 points immediately, a 5.5% increase. The S&P 500 and Nasdaq gaining 3.7% and 1.2%, respectively, with many analysts expecting those two indices to do even better later in the day on the news.

Shares of Pfizer jumped nearly 14% at the opening bell, while BioNTech gained 24%.

President Trump also lauded the news. “STOCK MARKET UP BIG, VACCINE COMING SOON. REPORT 90% EFFECTIVE. SUCH GREAT NEWS!” 

A number of supporters of the president quickly gave credit to Operation Warp Speed, a public-private partnership to accelerate the development of a Covid-19 vaccine. However, Pfizer was not part of Operation Warp Speed and reportedly has not received federal funds to help develop a vaccine.

“We were never part of the Warp Speed,” Dr. Kathrin Jansen, head of research and development at Pfizer, told The New York Times. “We have never taken money from the U.S. government, or from anyone.”

In a statement, Biden said the news was excellent but urged Americans to continue wearing masks and to socially distance themselves. “Today’s news is great news, but it doesn’t change that fact,” the president-elect said.

Investor notes on Monday morning pointed to expectations that the hardest-hit sectors — airlines, hotels, cruise lines, and other travel and hospitality areas — would see the biggest lift from the news.

A number of airline companies saw their stocks surge early Monday. American Airlines saw its shares jump nearly 25% in premarket trading, with shares of Delta and United Airlines following closely behind at just under 20% gains. Shares of Carnival Corp., one of the world’s biggest cruise lines, jumped 31% in early trading.

AMC Entertainment Holdings, the largest movie theater company, leapt up 88% in premarket trading.

Prior to the vaccine news, investors abroad had been ebullient over the Biden win. The MSCI World Index, which is used to measure equity market performance in global emerging markets, came close to hitting a new high last week after it became clear that Biden had won enough electoral votes to capture the presidency. The index hit of 2,491 points on November 5, a few points lower than its previous high of 2,494 points back in September. 

Indices in Asia were all more than 1% higher on Monday, with Japan’s Nikkei gaining 2.2% by its close and hitting its highest mark since the early 1990s. European markets were booming by 9 a.m. EST, with indices in Germany, France, and the United Kingdom all gaining 5%. The pan-European Stoxx 600 had gained 4.2% by that time.

Investors could see more happy days soon as Moderna is expected to release Phase III results on its Covid-19 vaccine candidate later this month.

Unfortunately, positive vaccine news is countermanded by cases of Covid-19 continuing to skyrocket. More than 50 million cases have been reported worldwide, according to data compiled by Johns Hopkins University, and 1.2 million people have died. In the United States, nearly 10 million have contracted coronavirus, while about 237,000 have died.

“The vaccine news is fantastic, but it’s not going to stop the US reaching 200K cases per day by Thanksgiving, and potentially 1M per day by year-end, with fairly obvious consequences for the hospital numbers,” tweeted Ian Shepherdson, chief economist at Pantheon Macroeconomics. “Right now, Covid is out of control in the U.S.”

Prior to the Pfizer announcement, the election was front and center on investors’ minds.

Biden was declared the winner on November 7 after solidifying his win in Pennsylvania and taking its 20 electoral votes. While President Trump has yet to concede, and in fact plans on launching a legal salvo to contest the election, Biden’s advantage in votes seems nearly impossible to overcome.

Biden inherits an economy that is recovering but still frail. Many experts, including the Federal Reserve, had predicted the U.S. economy to shuffle along through 2022 regardless of who is president.

“With the health situation rapidly deteriorating and economic momentum slowing, we forecast GDP growth averaging 3.6% in 2021, compared with 3.7% last month,” said economists at Oxford Economics over the weekend. “Real-time data is quite sobering with demand being restrained by surging Covid-19 infections, rising over 100,000 per day, and slower employment gains proving insufficient to offset lapsing fiscal aid.”

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