Friday, May 24, 2024

Markets rally worldwide on rising hopes for COVID-19 vaccine

by Associated Press

NEW YORK (AP) — Wall Street is rallying in early Wednesday trading on hopes that researchers are getting closer to finding a vaccine that works for COVID-19.

Investors see a vaccine as the best way for the economy and human life to get back to normal. The S&P 500 was 0.8% higher in its first trading after researchers said early-stage testing for one made by the National Institutes of Health and Moderna revved up people’s immune systems, as hoped.

The Dow Jones Industrial Average was up 261 points, or 1%, at 26,904, as of 10:04 a.m. Eastern time, and the Nasdaq composite was up 0.6%. Moderna itself jumped 10.9%, and the S&P 500 climbed back within 5% of its record set in February.

Companies that would benefit most from a return to normal life led the way, such as those that sell tickets for cruises, flights and concerts. Winners of the stay-at-home economy created by quarantines and lockdowns, meanwhile, lagged behind. Clorox and Netflix both fell.

Stocks also climbed across Europe and much of Asia, while Treasury yields rose in another sign of improved confidence.

Upbeat corporate earnings were helping support markets, “But the cherry on top has to be the positive virus vaccine update as optimism on the vaccine is more than a show stopper. It’s the ultimate recession stopper,” Stephen Innes of AxiCorp said in a commentary.

Of course, the stock market has made other big jumps recently following encouraging data on other potential vaccines or treatments, only to fall back again as coronavirus counts keep climbing. Nearly two dozen possible COVID-19 vaccines are in various stages of human testing around the world, all of which still need to prove themselves.

Other challenges also lie ahead for markets, beyond the uncertainty about the possible vaccines’ effectiveness.

Worsening coronavirus trends in California, Florida and other hot spots are threatening to snuff out the budding economic recovery that just got underway. Worries also remain high that the stock market has gone overboard in its rally: The S&P 500 has rallied nearly all the way back to its record within months, when it could take years for the economy and corporate profits to get back to where they were before the pandemic struck.

Markets nevertheless climbed Wednesday, bolstered by optimism about a possible vaccine. Some stronger-than-expected earnings reports from companies also helped to lift the market.

Goldman Sachs rose 2.2% after it reported much stronger results than analysts expected. Financial stocks in general did well, with those in the S&P 500 up 1.3%.

Other areas of the market where profits are closely tied to the strength of the economy were also particularly strong.

Industrial stocks rose 1.7% for the biggest gain among the 11 sectors that make up the S&P 500. They included a 4% rise for General Electric and a and a 3.8% jump for Southwest Airlines.

The yield on the 10-year Treasury rose to 0.63% from 0.61% late Tuesday. It tends to move with investors’ expectations for the economy and inflation.

In Europe, Germany’s DAX returned 1.7%, while the CAC 40 in Paris advanced 2.3%. Britains FTSE 100 picked up 1.8%.

In Asia, Tokyo’s Nikkei 225 advanced 1.6% after the Bank of Japan kept its ultra-easy monetary stance unchanged. It forecast that the economy would improve later in the year, assuming there is no major “second wave” of outbreaks of the new coronavirus.

Hong Kong’s Hang Seng was nearly unchanged, while stocks in Shanghai slipped 1.6% after President Donald Trump signed a bill and executive order that he says will hold China accountable for its oppressive actions against the people of Hong Kong.

The legislation and order are part of an escalating diplomatic offensive against China that is adding to chronic tensions over trade and other issues.

Benchmark U.S. crude oil edged up 3 cents to $40.32 per barrel. Brent oil, the international standard, picked up 15 cents to $43.05 per barrel.

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