Few things are as encouraging as a glimpse at the light at the end of the tunnel. Pharmaceutical makers Pfizer and BioNTech announced Monday morning that their coronavirus vaccine has shown strong results through ongoing drug trials – a 90% efficacy rate with minimal side effects. This news immediately gave lift to the markets, adding another historic moment to a year chock-full of them.Already buoyed from the media’s announcement of former Vice President Joe Biden’s 2020 presidential election win, the broad-based S&P 500 and Dow Jones Industrial Average indices recorded massive gains within the first five minutes of trading Monday morning and then gradually toned down the leap through the day. The S&P 500 closed at 3,550.50 points, up 41.06 points, a 1.17% gain. The Dow saw stronger results closing at 29,157.97, up 834.57 points, a 2.95% gain.
Both indices topped their all-time intraday highs, a particularly remarkable turn of events less than eight months after the precipitous fall that bottomed out March 20. Showing hope for the broader economy, stocks most damaged by the pandemic, such as smaller companies and areas like hospitality, saw the most benefit from the rally. Notably, the NASDAQ Composite, which has recorded the technology sector’s singular strength through the pandemic, saw early day gains that declined through the afternoon, closing down by 1.53%.
The markets made steady gains last week – the strongest during a presidential election week on record – and are continuing to push higher. We now look to the U.S. Senate, where two Georgia seats will be decided in a runoff election to determine the majority in Congress’ upper chamber. The possibility of split governance in the case of a Republican win may be easing some concerns about rapid change under a possible single-party rule.
Despite promising vaccine news, our hopes are tinged with continuing challenges and uncertainties. The U.S. is struggling with its highest rates of COVID-19 infections and deaths to date, and while encouraging, the vaccine development is not a guarantee. There are also questions about how fast the vaccine can be produced, how thoroughly it can be distributed and the public’s confidence in the drug. While we expect volatility to remain a companion for a while longer, this is a positive step toward normalcy.
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Material prepared by Raymond James for use by its advisors.