By Joe Wallace
U.S. stocks rose in early trading Monday, putting Wall Street on the front foot after promising results on a Covid-19 vaccine bolstered hopes for an economic rebound in 2021.
The S&P 500 climbed 0.6%, after the benchmark stocks gauge snapped a two-week winning streak on Friday. The Nasdaq Composite Index also gained 0.6%, while the Dow Jones Industrial Average advanced 0.6%, or 184 points.
The University of Oxford and AstraZeneca said their vaccine was found to be as much as 90% effective in preventing infections without serious side effects in a large trial. The results added to optimism among investors that the deployment of effective vaccines can help bring coronavirus under control next year, allowing beaten-down sectors of the economy to recover.
"When you look into the details, it looks like very good news," said Paul O'Connor, head of multi asset at Janus Henderson Investors. Unlike shots under development from Pfizer and Moderna, AstraZeneca's vaccine can be stored at temperatures above zero degrees Celsius, easing the distribution process, Mr. O'Connor said.
Pfizer and partner BioNTech on Friday asked the U.S. Food and Drug Administration to clear the companies' Covid-19 vaccine, and said that distribution could potentially begin mid-December.
Shares in economically-sensitive energy producers and banks were among the best performers in Europe. The Stoxx Europe 600 wavered. Shares in AstraZeneca slipped 2.6%.
"There's a growing prospect of a significant normalization of economic activity in the second half of next year," said Mr. O'Connor. Still, he added that much of the vaccine optimism was already baked into stock prices, and thinks the current surge of coronavirus is likely to weigh on economic growth in the U.S. in the coming months.
The promising outlook for a third Western vaccine added to recent pressure on the dollar, pushing the ICE Dollar Index to its lowest level since April 2018.
Investors are shifting money from the U.S. toward other markets that stand to benefit from a revival of the world economy, said Georgette Boele, senior foreign-exchange strategist at ABN Amro Bank. Signals that the Federal Reserve will keep short-term interest rates on hold at low levels have taken the shine off the U.S. bond market, further weighing on the greenback, Ms. Boele added.
Ahead of the bell in New York, shares in Regeneron Pharmaceuticals rose 3.3% after the FDA cleared the company's antibody drug cocktail for use treating mild to moderate Covid-19 patients.
Merck shares gained 1.6% after the drugmaker said it was buying the biopharmaceutical company OncoImmune, which has reported positive results from a late-stage study of a coronavirus treatment candidate, for $425 million.
Investors will get an early look at how the wave of infections is affecting the manufacturing and services sectors when surveys of purchasing managers are released at 9:45 a.m. ET. The preliminary data for November are expected to show that activity in the services sector continued to grow, but at a slower pace than last month.
The U.S. reported 142,732 new cases of coronavirus Sunday and registered a record number of hospitalizations for the 13th straight day. Reported case counts are generally lower over the weekend, and the country's rolling seven-day average continues to climb.
In Europe, where authorities have taken a more stringent approach to stemming the second wave of coronavirus, restrictions are already taking their toll on economy. Business activity has fallen so far this month, surveys of purchasing managers by IHS Markit showed Monday, with a particularly steep decline in France.
In government bonds, the yield on 10-year Treasury notes ticked up to 0.852%, from 0.828% Friday. Yields rise when bond prices fall.
Asian markets broadly climbed, with China's Shanghai Composite Index ending 1.1% higher. South Korea's Kospi advanced 1.9% after government data showed exports rose 11% in the first 20 days of November, a boost for the trade-reliant economy.
Brent-crude oil futures rose 1.4% to $45.57 a barrel, putting the international energy benchmark on track for its highest settlement since early September.
Write to Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires