U.S. stock indexes were struggling to retain modest gains midday Monday, to kick off a holiday-shortened week, as a steady flow of updates on progress toward effective coronavirus vaccines and treatments created a potential palisade against COVID-19.
U.S. markets will be closed on Thursday for Thanksgiving and volumes throughout the week are likely to be thinner than usual.
How are major benchmarks performing?
- The Dow Jones Industrial Average DJIA, +0.78% rose 142 points, or 0.5%, to 29,407.
- S&P 500 index SPX, +0.37% fluctuated between positve and negative at 3,558, well off its intraday peak at 3,589.81.
- Nasdaq Composite Index COMP, +0.17% fell 31 points to reach 11,823, a decline of 0.3%, pulling back from an intraday high at 11,949.33
On Friday, stock indexes finished the week mostly lower:
- The Dow booked a 0.7% loss
- The S&P 500 finished with a weekly decline of 0.8%
- The Nasdaq Composite Index, however, gained 0.2%
What’s driving the market?
Investors are starting another week with positive updates on experimental therapies and prophylactics for COVID-19 that are helping to support some buying, despite hospitalizations for the deadly disease entering a dangerous phase as the holiday period gets under way.
The University of Oxford and AstraZeneca AZN, -1.50% said their vaccine was found to be as much as 90% effective in preventing infections without serious side effects in a large trial.
The report comes amid a series of weekly updates on vaccines and treatments that appear to be forming a bulwark against the pathogen that has taken more than 250,000 lives in the U.S.
Over the weekend, U.S. health officials agreed to allow emergency use of a second antibody drug to help the immune system fight COVID-19, an experimental medicine that appeared to prove effective in helping treat President Donald Trump when he was sickened by the virus earlier this year.
Recently, Pfizer Inc. PFE, -0.95% filed for approval from U.S. regulators for emergency use of the vaccine it’s developed with BioNTech SE BNTX, +1.41% that has proven 95% effective in a clinical trial, while Moderna Inc. MRNA, +2.68% earlier this month said its vaccine candidate was more than 94% effective in a trial.
Wall Street is hoping that effective vaccines and therapeutics can help bring the coronavirus under control soon, even as a spike in cases and hospitalizations takes hold here and elsewhere in the world.
Indeed, the U.S. reported 142,732 new cases of the disease caused by the novel strain of coronavirus and registered a record number of hospitalizations for the 13th straight day.
Nearly 84,000 people were hospitalized with the disease as of Sunday, according to the Covid Tracking Project.
Caution about how quickly experimental drugs can be distributed, however, could create some headwinds for bullish investors.
“While the potential for vaccines to start in a matter of weeks is a reason to celebrate, the reality is that there is currently no logistical process in place for this to happen quickly,” wrote Michael Hewson, chief market analyst at CMC Markets UK.
“Furthermore, U.S. COVID cases are still rising rapidly with millions of Americans set to find this week’s Thanksgiving break severely disrupted due to various state travel restrictions,” he said.
Analysts at UBS led by Mark Haefele, chief investment officer, global wealth management, on Monday reported that the investment company thinks that “medium term positives will outweigh short-term worries, allowing markets to move higher,” referencing medium-term positives, including cresting cases of COVID-19 in Europe, a hoped-for roll-out of vaccines before the end of 2020, and the promise of some form of a fresh round of coronavirus-focused aid for businesses and workers in the coming weeks, if not months.
“For the greatest upside potential, however, we recommend investors diversify into the next leg of the recovery, increasing exposure to select cyclical sectors that have lagged so far during 2020,” the UBS analysts wrote.
On the political front, President-elect Joe Biden intends to nominate Antony Blinken to serve as secretary of state, according to reports. That move comes even as Trump continued efforts to contest the outcome of the Nov. 3 election, as his legal options narrowed.
In economic news, the Chicago Fed national activity index rose to 0.83 in October from revised 0.32 in prior month, indicating some improvement in business activity.
Separately, a report from IHS Market, reflecting a composite purchasing managers index, showed a rise in services activity to 57.7 from 56.9 from the previous month and a rise in manufacturing to 56.7 from 53.4 in November. A reading of 50 or better indicates improving conditions.
Which stocks are in focus?
- Shares of Merck & Co. MRK, -0.74%Inc were down 0.6% on Monday, even after the drugmaker announced a deal to buy clinical-stage biopharmaceutical company OncoImmune for an upfront payment of $425 million in cash.
- Schrödinger Inc. shares SDGR, +12.59% jumped 12%.5, after the company announced a drug discovery agreement with Bristol-Myers Squibb Co. BMY, -0.62% that could net it up to $2.7 billion in milestone payments and royalties. Shares of BMY were down 0.3%.
- Shares of Tesla Inc. TSLA, +6.60% surged over 5% on Monday after Wedbush analyst Dan Ives boosted his base-case price target, and said he envisions a scenario in which the electric vehicle market leader’s stock reaches $1,000.
- Shares of JFrog Ltd. FROG, -2.00% fell 3.6%, after the software company that went public in mid-September announced the early lock-up release of one-quarter of the locked-up shares.
- Shares of Ideanomics Inc. IDEX, +62.98% surged over 55% after the company focused on investing in disruptive technologies announced the doubling of its investment in California-based Solectrac Inc., which makes battery-powered electric tractors.
- Warner Music Group Corp. WMG, -2.27% reported Monday a breakeven fiscal fourth quarter, missing expectations, although revenue rose slightly above forecasts. Shares were up 4.4%.
How are other assets performing?
The pan-European Stoxx 600 index SXXP, -0.19% edged 0.% lower, while the U.K.’s FTSE 100 index was trading 0.% lower on Monday.
In Asian markets, China’s Shanghai Composite Index SHCOMP, +1.08% closed 0.5% higher, the CSI 300 000300, +1.24% finished up 1.3%, while Hong Kong’s Hang Seng HSI, +0.13% booked a 0.1% loss. Japan’s Nikkei 225 NIK, -0.41% was closed due to a holiday.
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.853% rose 2 basis points to around 0.85%. Yields and prices move in opposite directions.
The ICE U.S. Dollar Index DXY, +0.11%, a gauge of the greenback’s strength against its major rivals, was 0.% higher.
Crude-oil futures CL.1, +1.24% rose 1.3% to trade around $42.98 a barrel. Meanwhile, gold futures GCZ20, -1.83% fell 2.2%, to trade at $1,830 an ounce.
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