Dow rallies nearly 300 points to start the week after Pfizer vaccine gets full FDA approval
23 Aug 2021
Traders on the floor of the New York Stock Exchange, August 11, 2021.
Stocks were higher Monday following a volatile week on Wall Street, led by reopening stocks as the Food and Drug Administration approved its first Covid-19 vaccine.
The Dow Jones Industrial Average gained 287 points, or 0.8%. The S&P 500 and Nasdaq Composite rose 1% and 1.6%, respectively, to all-time highs.
The major averages are coming off a losing week as investors grew worried that the Fed’s potential move to pull back monetary stimulus could slow down the economic recovery that is already challenged by the spread of the delta Covid-19 variant.
“Markets may take a breather after their recent run, but strong Q2 results have provided a fundamental justification and reinforced our confidence in the sustainability of the recovery,” according to Barclays.
Shares of vaccine makers traded higher Monday after the FDA granted full approval for the two-dose Pfizer-BioNTech vaccine for Covid-19. Pfizer shares rose 2.9%. Its partner BioNTech‘s stock jumped 10% and Moderna is 7% higher. Trillium Therapeutics is soaring on news that it’ll be acquired by Pfizer. Its shares are up 189%.
As reopening trades resurface, traders are eagerly awaiting the Jackson Hole symposium for clues on the Fed’s timeline for dialing back its $120 billion a month bond-buying program. The event, originally scheduled as an in-person gathering, will now take place virtually on Thursday and Friday for the second year in a row.
Chairman Jerome Powell will give a speech is titled “The Economic Outlook,” and could have a more near-term focus, according to Nomura economist Aichi Amemiya.
“Given the recent deterioration in incoming data and the pandemic situation, we see some risk Powell focuses on increased uncertainty due to the latest COVID-19 surge,” Amemiya said in a note. “At a minimum, we view recent comments from Fed officials as supporting our view of a December tapering announcement despite a preference on the FOMC for November as of the July meeting.”
The blue-chip Dow fell 1.1% last week, while the S&P 500 declined nearly 0.6%, breaking a two-week winning streak. The tech-heavy Nasdaq dipped 0.7% during the week.
“We suspect investor conviction is being challenged by the potential for upcoming monetary policy changes, shifting growth vs. value rotations, and a rising trajectory of new coronavirus cases,” Craig Johnson, technical market strategist at Piper Sandler, said in a note.
For the month of August, major benchmarks are poised to post modest gains. The S&P 500 is up 1.1% month to date, while the blue-chip Dow has gained 0.5% and the Nasdaq has climbed 0.3%.
“August is a historically volatile month for markets and this year is no different, with investors currently climbing multiple walls of worries,” said Rod von Lipsey, managing director at UBS Private Wealth Management. “Upticks in Covid-19 cases and a downward spiral in Afghanistan are creating a crisis of confidence, at a time when many investors are on holiday.”