By Mischa Frankl-Duval
U.S. stocks opened mixed Wednesday after Pfizer and partner BioNTech said their Covid-19 vaccine proved to be both effective and safe, putting it on track for distribution by the end of the year if health regulators permit.
The S&P 500 index ticked down less than 0.1%, while the Dow Jones Industrial Average rose 0.2%. The tech-heavy Nasdaq Composite Index retreated 0.1%.
Optimism that vaccines will curtail infection levels and propel the economic rebound next year has bolstered investors' risk appetite this month. Relatively low death rates even as Covid-19 cases rise, suggesting that doctors have better treatment options available than they did in the spring, is also helping buoy sentiment.
"Given the nature of this crisis, the only way to get out of this cycle of first wave, second wave, third wave [of infections] is to start circulating a vaccine, and that's going to begin relatively shortly," said James McCormick, a strategist at NatWest Markets.
A vaccine could improve the outlook among business-owners and consumers by signaling that the economy will return to pre-Covid levels. "If you can convince the consumer to both re-engage in the economy, and also that they'll have a job in the next six months, that unleashes a major sector of the economy," he said.
A key measure of expected turbulence in U.S. markets, the Cboe Volatility Index, dropped to its lowest in three months. That suggests investors are seeking less protection against a big drop in stocks, after months of uncertainty due to the U.S. election and rising Covid-19 cases.
Ahead of the New York opening bell, Pfizer shares rose almost 3%. The drugmaker said final results from its joint clinical trial with BioNTech showed its coronavirus inoculation was 95% effective. Pfizer plans to seek authorization for the vaccine within days, the companies said Wednesday.
Boeing jumped 5.8% after the U.S. cleared the plane maker's 737 MAX for passenger flights, helping to resolve the plane maker's biggest pre-pandemic crisis.
Shares in Lowe's dropped over 6% in premarket trading. The home-improvement retailer said it expects fourth-quarter adjusted operating income as a percentage of sales to be about flat compared with the prior-year period due to Covid-19-related operating expenses.
Rival Target's shares rose 1.9% after the retailer said sales rose steadily in its most recent quarter as demand for household goods and home-office supplies continued to grow during the pandemic.
After markets close, Nvidia and L Brands will disclose their quarterly earnings, giving investors fresh insights into the health of American businesses.
In broader markets, a litany of concerns including new restrictions on social and business activity, and the halting pace of economic recovery, are weighing on overall sentiment. Hopes for a large fiscal stimulus package are also ebbing, investors said.
Federal Reserve Chairman Jerome Powell on Tuesday cautioned that the economy faces significant challenges and uncertainty because of the increased spread of the coronavirus. He also said it was too soon to say how a potential vaccine would change the outlook, with the possibility of widespread vaccination still many months away.
The number of newly reported Covid-19 cases rose on Tuesday, and hospitalizations hit another record in the U.S. With cases on the rise, more states are implementing new restrictions on people's activity. Ohio imposed on Tuesday a statewide curfew, requiring residents to stay at home from 10 p.m. to 5 a.m.
Fresh data Wednesday showed that U.S. housing starts for October rose almost 5% to 1.53 million, exceeding the consensus estimates of 2.5% growth. The American housing market has been one of the few bright spots in the economy this year.
In bond markets, the yield on 10-year Treasurys ticked down to 0.850%, from 0.872% on Tuesday. That was its lowest level in almost two weeks.
"When you look at the U.S., the prospect for either near-term fiscal policy or sizable medium-term fiscal policy is much reduced," said Mr. McCormick. "What you're seeing over the last couple of days is genuine disappointment starting to seep into bond markets."
Oil prices edged higher. Brent crude, the international benchmark, gained over 2% to $44.71 a barrel.
Overseas, the pan-continental Stoxx Europe 600 ticked up 0.4%.
Most major Asian equity benchmarks ended the day higher. Japan's Nikkei 225 index dropped 1.1% by the close of trading after local authorities said there had been a jump in coronavirus cases.
Write to Mischa Frankl-Duval at Mischa.Frankl-Duval@wsj.com
(END) Dow Jones Newswires
11-18-20 0948ET
