U.S. stocks catapulted to records Monday on news that a second COVID-19 vaccine candidate showed promise, bolstering hopes of an economic recovery even as new infections surged around the world.
Separately, shares of Tesla soared 12% in after-hours trading after S&P Dow Jones Indices announced that the electric carmaker would join the S&P 500 index on Dec. 21.
The Dow Jones Industrial Average climbed 470.63 points, or 1.6%, to finish at a new all-time high of 29,950.44, eclipsing its Feb. 12 record close before the coronavirus pandemic battered the global economy. The S&P 500 added 1.2% to 3,626.91, notching another record.
The Nasdaq Composite rose 0.8% to 11,924.13, lagging the rest of the market amid lessened interest for tech stocks.
The Dow rose to a record for the first time in nine months after pharmaceutical company Moderna said its vaccine appears to be 94.5% effective, according to preliminary data. Markets rallied as they did when Pfizer and BioNTech said earlier this month that their potential vaccine had a similar effectiveness rate. Moderna shares jumped 10%.
Small-company stocks, travel companies such as cruise lines and others that stand to benefit from a reopening of the economy led the way higher. At the same time, pandemic-winning stocks that benefited from lockdown orders such as Amazon and Zoom Video Communications lagged as they no longer looked like the only safe bets to play.
Having similar results from two companies is reassuring, said Dr. Stephen Hoge, Moderna’s president.
“Additional positive news on the Covid-19 vaccine front is more evidence that an end to the pandemic is on the horizon and that the economy can eventually reopen without fears of further lockdowns,” David Trainer, chief executive of New Constructs, an investment research firm, said in a note.
While approval for the vaccine can come within weeks, the rollout of the drug will take more time. The U.S. has reported more than 11 million cases and more than 246,000 deaths, according to Johns Hopkins University data.
“While this is clearly very good news, the vaccine has not yet been submitted for approval, meaning it will be weeks – or even months – before it is ready to be distributed,” Adam Vettese, analyst at multi-asset investment platform eToro, said in a note.
“Until it is available for widespread use, then I expect markets to remain volatile and to reflect the general nervousness currently felt by investors.”
Even before the vaccine news, markets had been rising as investors welcomed the signing on Sunday of an agreement establishing the world’s biggest trade bloc, a group of 15 countries that includes China, Japan, South Korea, 10 countries in Southeast Asia, New Zealand and Australia. The United States, the No. 1 economy, is not a part of it.
Called the Regional Comprehensive Economic Partnership, the pact mostly will bring already low tariffs lower over a 20-year period. It is expected to have a positive but incremental effect on trade in the region.
Meanwhile, data released Monday showed Japan, the world’s third-largest economy, grew at an upbeat 21% annual pace in the last quarter, the first quarter of growth in nearly a year.
Tokyo’s Nikkei 225 jumped 2.1% and the Hang Seng in Hong Kong picked up 0.9%. The Kospi in South Korea surged 2% and in Australia the S&P/ASX 200 advanced 1.2%. The Shanghai Composite index gained 1.1%.
In Europe, France’s CAC 40 jumped 1.7%, and Germany’s DAX returned 0.5%. The FTSE 100 in London gained 1.7%.
Benchmark U.S. crude oil climbed 3% to settle at $41.34 a barrel amid hopes that a healthier economy would burn more fuel. Brent crude, the international standard, rose 2.4% to settle at $43.82 a barrel.