Stock Market Rallied Monday due to Positive Vaccine Testing
Global stocks skyrocketed to an all-time high on Monday after Pfizer Inc. announced that its coronavirus vaccine prevented more than 90% of infections in a large-scale study. Meanwhile, Treasuries plummeted down, and the greenback weakened.
Pfizer’s announcement is the clearest sign thus far that scientists are making progress in developing a Covid-19 vaccine that could end the pandemic. Investors responded by moving to risk assets and abandoning safe-havens.
As a result, futures on the S&P 500 surged forward by 3.6%, and contracts on the Russell 2000 Index of small-cap stocks rallied by 7%. On the other hand, the tech-heavy Nasdaq 100 Index pared gains. Despite that, the stock still gained 0.8%.
According to recent studies, Pfizer’s vaccine prevents 90% of infections. Such preliminary results on the vaccine make it possible for the firm to seek an emergency-use authorization from regulators, but only if further research proves that the shot is safe.
Still, Pfizer stock extended gains in premarket trading, jumping about 7%. Furthermore, American depositary receipts for BioNTech skyrocketed by about 11%. This company is also developing the vaccine.
The good news boosted a rally that’s been running for the previous week after the U.S. elections. Stocks markets have celebrated Joe Biden’s win for presidency while speculating that it will usher in a better trade relationship with China, as well as another economic stimulus package.
The optimism is contagious, and there’s also precedence for the stock market’s gains to continue. Ever since 2000, every time the S&P 500 increased heading into Election Day, both November and December came in green, as well. Besides, the first years of presidential terms have proven to be good ones of late. According to Leuthold Group data, they’ve seen average gains of 18.6% since 1986.
How much did the major indexes gain?
Overall, the futures on the S&P 500 Index gained 3.4% on Monday, while the Stoxx Europe 600 Index rallied by 4.5%. Meanwhile, the MSCI Asia Pacific Index jumped by 1.1%, and the MSCI Emerging Market Index climbed up by 1.7%.
Brexit trade-deal talks between the EU and U.K. continue in London Monday. Furthermore, Tuesday is the EU’s target date for triggering tariffs on approximately $4 billion of U.S. goods. On Wednesday, Alibaba plans to hold its annual Singles Day. It’s an online global shopping phenomenon that had $38 billion of sales last year.
There are other events that traders are looking out for. ECB President Christine Lagarde, Fed Chair Jerome Powell and BOE Governor Andrew Bailey plan to speak on Thursday at an online ECB Forum.
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