Stocks Close at Records After Positive Moderna Vaccine Results

By Caitlin McCabe, Mischa Frankl-Duval and Frances Yoon

The Dow Jones Industrial Average surged to a new record Monday after a second set of upbeat results from a potential Covid-19 vaccine lifted shares of companies that have been walloped by the pandemic.

The index of blue-chip companies gained 470.63 points, or 1.6%, to 29950.44, its first record close since February and within striking distance of the yet-to-be-reached 30000 milestone.

The Dow's rise was driven by a rally among economically sensitive companies, including Boeing and Chevron, both of which surged more than 7%. Those jumps also helped the S&P 500 to a second consecutive record close, with the benchmark index gaining 41.76 points, or 1.2% to 3626.91.

Monday's moves came after Moderna said its experimental vaccine was 94.5% effective at protecting people from Covid-19 in an early look at pivotal study results, making it the second vaccine to hit a key milestone. Last week, Pfizer and partner BioNTech said its vaccine showed in an early analysis to be more than 90% effective.

Gains were wide-ranging. Shares of banks, retailers, oil companies and travel stocks rallied, while several mega-cap technology companies also climbed. That helped lift the Nasdaq Composite 94.84 points, or 0.8%, to 11924.13, its third-highest close in history.

U.S. stocks have been on a tear recently, with the Dow industrials and the S&P 500 both posting double-digit gains so far this month. Analysts had expected volatility in the weeks following the election, but optimism about a vaccine has turbocharged bets on a faster economic recovery and powered indexes higher.

"2020 is a year we won't ever forget and yet somehow equity markets have completely erased it from their memory," said Seema Shah, chief strategist at Principal Global Investors. "They've managed to reach record highs despite everything that has happened."

Among the biggest gainers Monday were shares of economically sensitive companies that have struggled with people stuck at home. Cruise operator Carnival added 9.7%, while shares of United Airlines Holdings and Exxon Mobil both rose more than 5%. Shares of Moderna, meanwhile, surged 9.6%.

The Russell 2000 index of small-company stocks rose 2.4% to bring its gains for the month to more than 16%. Investors in recent days have bet that a vaccine will boost profits at smaller businesses, which could also benefit from fiscal stimulus in the months ahead.

Yet unlike last week, investors didn't shed shares of some the highflying technology companies that led markets' rebound from their March lows. Apple rose 0.9%, Facebook added 0.7% and Microsoft gained 0.3%. Some tech companies did decline, including Netflix and Zoom Video Communications.

Investors and analysts said positioning suggests that even amid the recent enthusiasm, some traders may be anticipating some choppiness ahead. If regulators ultimately authorize one or both of the vaccines in the coming weeks, the initial supply is likely to be limited and targeted to certain populations. That could possibly constrain the rapid recovery that investors are eager to see.

"There's a long way to go between Phase III results and a normal economy, " said James Athey, a senior investment manager at Aberdeen Standard Investments.

In the meantime, many analysts and investors worry that rapidly rising coronavirus cases threaten to further weigh on corporate profits. Though some epidemiologists have said that total shutdowns may not be necessary, the recent resurgence in cases across the nation has the potential to prompt school closures or pause reopenings.

Greg Hahn, chief investment officer at Winthrop Capital Management, said rising Covid-19 cases are among the reasons why he remains bullish on technology stocks. He said he recently picked up shares of Chinese technology firms and companies such as Booking Holdings, the online travel agency, across the portfolios he manages. He has also slightly pared back ownership of mega-cap technology stocks.

"I'm really disturbed" by rising Covid-19 cases, Mr. Hahn said. "That's why still having tech in the portfolio is important."

Still, even with concerns among some investors in the market, movement across other asset classes signaled investors' optimism. The yield on 10-year U.S. Treasury note rose to 0.906%, from 0.892% on Friday. Bond yields rise when prices fall.

Commodities also rallied. Copper, considered a bellwether for global growth, jumped to its highest settle value since June 2018. Meanwhile, Brent crude, the international benchmark, rose 2.4% to $43.82.

Overseas, the pan-European Stoxx Europe 600 rose 1.2%, while Asian stocks benefited from the signing of a major trade deal that includes China, Japan, South Korea and 12 other countries. The regional bloc covers around a third of global economic output.

Japan's Nikkei 225 rose 2.1% to log its highest closing value since June 1991. The Shanghai Composite climbed 1.1%.

Write to Caitlin McCabe at [e-mail], Mischa Frankl-Duval at [e-mail] and Frances Yoon at [e-mail]

(END) Dow Jones Newswires

11-16-20 1749ET