US stocks rallied Monday amid hopeful news about a possible coronavirus vaccine, suggesting they may regain ground after their biggest weekly percentage drop in nearly two months. Read Mexicano in the competition for the coronavirus vaccine
In the first minutes of Wall Street’s operation, the Dow Jones industrial average advanced 2.84 percent to 24,352 points, while the S&P 500 rose 2.39 percent and the Nasdaq 1.68 percent.
Wall Street suffered its worst drop in more than three decades in March. Photo: AP
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All three indices reported a loss of 2.56, 2.26 and 1.17 percent, respectively, last week after a series of data highlighted the sharp contraction in economic activity across the country.
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Titles of Moderna, a company that has been working to find a coronavirus vaccine, rose 34 percent before the opening bell in New York. The company said it had positive results from the first human tests of its vaccine.
In bond markets, the benchmark 10-year Treasury yield rose to 0.674 percent from 0.640 percent on Friday. Yields move inversely to bond prices.
“Clearly, the interim results of the vaccine are positive. I think the key point is that while reducing blockades will help increase economic activity, keeping social distance in place will affect some industries, factories, consumer confidence. consumers and travel, “said Edward Park, deputy chief investment officer at Brooks Macdonald.
“The idea that there has been progress in the Moderna trials, but also the more positive news that it appears that the coronavirus could be addressed with a vaccine, has helped to increase sentiment,” Park said.
In Europe, travel companies and airlines reported profits. Vacation provider TUI was up 13.5 percent, Ryanair Holdings 11.8 percent and British Airways owner IAG Group 9.6 percent.
There were several factors behind the increase, said Russ Mold, chief investment officer at AJBell. The main tourist destinations in Italy and Greece indicated that they would accept tourists from countries where international travel was allowed.
European flight operator Ryanair reported its annual results on Monday and reiterated that it planned to resume 40 percent of its flights starting in July. After grounding 99 percent of their planes in April, investors were concerned about losing the opportunity to buy the dip, Mold said.
There is an item to enter now; it cannot get worse and it can improve markedly, “he said.
Federal Reserve Chairman Jerome Powell warned Sunday that the US economic recovery could take more than a year. The unemployment rate is likely to continue rising through June and then begin to decline as companies re-open, and both the Fed and lawmakers may need to do more to boost the economy.
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“If the blockages could be alleviated for a longer period of time, that would lead to the recovery not actually taking place until 2021,” Park said. “The size of the recession in the first half of 2020 is almost seen by the markets as a curiosity, as investors believe that growth will at least partially recover.”
“The worse the news, the more support there will be from central banks, and therefore more liquidity, as far as some investors are concerned, that’s why they’re buying,” Mold said. “That is not the main street view, but it appears to be the Wall Street view.”
With information from the Wall Street Journal
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