Stocks got off to a strong start on Monday, with the S&P 500 and Nasdaq Composite setting new records, as investors appeared optimistic over a potential COVID-19 treatment.
What are major benchmarks doing?
The Dow Jones Industrial Average DJIA, +0.57% rose 115 points, or 0.4%, to 28,048. The S&P 500 SPX, +0.57% gained 22 points, or 0.7%, to 3,419, after touching an intraday high at 3,426. The Nasdaq Composite COMP, +0.51% jumped 102 points, or 0.9%, to 11,410, following its intraday peak at 11,462.05. At its peak, the Dow was trading within 5% of its Feb. 12 record at 28,551.42.
The S&P 500 on Friday drifted higher by 0.3% in light volume to end at a record 3,397.16, marking a 0.7% weekly advance. The Dow rose 190.60 points, or 0.7%, on Friday to end the week with a gain of less than one point at 27,930.33. The tech-heavy Nasdaq Composite logged a 2.7% weekly rise, finishing Friday at 11,311.80, its 36th record finish of 2020.
What’s driving the market?
The Food and Drug Administration on Sunday said it had approved the use of convalescent plasma, the antibody-rich component of blood taken from recovered COVID-19 patients, as a treatment for serious coronavirus cases. Medical experts said the treatment may provide benefits to those battling the disease, but that there isn’t conclusive evidence of its effectiveness, while questions remain about when it should be administered and dosage.
President Donald Trump hailed the move in a Sunday evening news conference after the administration had accused the agency, without citing evidence, of slowing approval in order to undermine his re-election prospects.
Also, the Financial Times reported that Trump may order the FDA to grant the same type of approval to the University of Oxford vaccine to be distributed by AstraZeneca AZN, +3.05% AZN, +1.95%.
“Markets have started the week on a cheery note as news that President Trump has authorized the emergency use of plasma treatment for COVID-19 patents and is considering fast tracking a UK vaccine before the election boosted sentiment,” said Raffi Boyadjian, investment analyst at XM, in a note.
Expectations for a breakthrough virus treatment have been a driving force behind the market’s rebound from its pandemic-induced plunge earlier this year, Boyadjian said, though “there’s yet to be any conclusive results from any of the vaccines or treatments that are under development for the coronavirus and many investors have yet to wake up to the prospect that the pandemic could still be around in a year or two.”
Read:Are stock market investors overpricing or underpricing a coronavirus vaccine?
The S&P 500 last week returned to record territory, erasing a nearly 34% plunge that took the U.S. benchmark from a record Feb. 19 close to its March 23 low, in a rally driven largely by shares of big tech companies that have seen their businesses benefit from the pandemic, while shares of companies whose performance is tied more closely to the economic cycle have continued to lag despite some recent stretches of outperformance.
Investors are looking ahead to the Kansas City Federal Reserve Bank’s annual symposium. The event, typically held in Jackson Hole, Wyo., will be conducted via webcast this year. Fed Chairman Jerome Powell is slated to speak Thursday on how the central bank plans to achieve its twin goals of stable prices and maximum employment once the coronavirus pandemic has ended.
In economic data, the Chicago Fed’s national activity index fell to 1.18 in July from a revised record-high of 5.33 in June. A zero value of the index indicates the national economy is expanding at its historic trend rate of growth.
Which stocks are in focus?
- AstraZeneca’s AZN, +1.95% stock rose more than 3% Monday, boosted by the report that U.S. regulators are considering fast-tracking the drug manufacturer’s coronavirus vaccine candidate.
- Blackstone Group Inc. BX, +0.71% shares rose 0.7%. Takeda Pharmaecutical Co. announced it would sell its consumer health care business for 242 billion yen ($2.3 billion) to the U.S. private equity giant, The Wall Street Journal reported Monday.
- Shares of diversified industrial company NN Inc. NNBR, +11.53% soared 16%, after the company said it has agreed to sell its life sciences business of units of American Securities LLC in a deal worth $825 million.
What are other markets doing?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.625% TMUBMUSD10Y, 0.625% fell 1.3 basis point to 0.627%. Bond prices move inversely to yields.
Gold futures GCZ20, +0.02% rose, with the December contract up 0.6% at $1,958 an ounce on Comex. Oil futures CL00, +0.18% gained ground as a pair of tropical storms converged on the Gulf of Mexico, forcing the closure of offshore oil rigs accounting for more than half of the region’s production.
The greenback was on the backfoot, trading down 0.4% based on trading in the ICE U.S. Dollar Index DXY, -0.24%.
In global equity markets, China’s CSI 300 000300, +0.78% rose 0.8%, the Shanghai Composite SHCOMP, +0.14% ended 0.2% higher, and Japan’s Nikkei NIK, +0.28% closed with a gain of 0.3%. The Stoxx Europe 600 SXXP, +1.39% jumped 1.7% and U.K.’s FTSE benchmark UKX, +1.80% advanced 1.8%, getting a boost after the FDA announcement.
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