Stock futures were mixed Tuesday morning as investors reined in an initial wave of optimism over a promising vaccine candidate. Tech shares remained under pressure, and contracts on the Nasdaq dipped more than 1%.
News that a Pfizer (PFE) and BioNTech’s (BNTX) vaccine candidate was more than 90% effective in preventing COVID-19 in patients in its clinical trial helped fuel a market rally earlier on Monday. During the regular session, the S&P 500 and Dow rocketed to intraday records, with the latter index adding as many as 1,610 points, or 5.7% at session highs. However, both indices pared some gains into market close.
“I think the big surprise here was the efficacy. I think you had polled investors before this, the efficacy range would have been 50-75% as sort of a wide range,” Stuart Kaiser, UBS Head of Equity Derivatives Research, told Yahoo Finance on Monday. “And if this number is truly 90% or above, I think that is what the market is responding so positively to.”
More positive news from companies working on COVID-19 vaccines and therapeutics came out during the overnight session. Eli Lilly (LLY) said its antibody therapy for treating mild to moderate COVID-19 in high-risk patients had received emergency use authorization from the U.S. Food and Drug Administration. Shares of the drug-maker rose more than 3% in early trading.
Shares of cruise lines, airlines and lodging companies – which each stand to benefit from the increase in consumer confidence that an effective vaccine might confer – gave back some gains in late trading after surging during the regular session.
Many of the tech stocks that had led the market higher earlier this year did not participate in Monday’s rally, however, and continued to sell off Tuesday morning. Investors unloaded positions in software names that had climbed throughout much of 2020, as traders treated them as safer bets while the pandemic threatened to keep people mostly at home. Other safe haven assets, including gold, silver and U.S. Treasuries, steadied Tuesday morning after tumbling during Monday’s session.
A successful vaccine has widely been viewed by investors, company executives and politicians as the key component of a broad-based economic reopening and sustained recovery. About 27 million workers, or around 22% of the U.S. workforce, are in occupations that require close physical proximity, Torsten Slok, chief economist for Apollo Global Management, pointed out in a note, with many of these workers having been put out of work by the fall-out from the pandemic and social distancing orders.
Still, widespread distribution of a vaccine – from either Pfizer or one of the other companies in late-stage trials including Johnson & Johnson (JNJ) and Moderna (MRNA) – is not likely to take place for months, even after approval is granted. Some analysts cautioned against extrapolating too far beyond Monday’s knee-jerk jump higher in markets as the race for a vaccine, and the ongoing uncertainty over whether Congress might deliver additional fiscal stimulus in the meantime, continue to play out.
“The vaccine news is really a 2021 story and we still have the worst to deal with with COVID, as cases run at new highs. So the vaccine is not an immediate fix,” Carter Henderson, Fort Pitt Capital Portfolio Specialist, told Yahoo Finance on Monday. “That’s why we believe stimulus is still on the table. So if we get news about stimulus early in next year coupled with vaccine news, we think the market could have a true melt-up.”
7:24 a.m. ET: Stocks point to mixed open, Dow futures add 200+ points while tech shares slide
Here were the main moves in markets as of 7:24 a.m. ET:
S&P 500 futures (ES=F): 3,540.25, down 3.75 points or 0.11%
Dow futures (YM=F): 28,278.00, up 230 points or 0.79%
Nasdaq futures (NQ=F): 11,635.75, down 184.75 points or 1.56%
Crude (CL=F): +$0.25 (+0.62%) to $40.54 a barrel
Gold (GC=F): +$22.30 (+1.2%) to $1,876.70 per ounce
10-year Treasury (^TNX): -2.1 bps to yield 0.937%
7:12 a.m. ET Tuesday: EU files antitrust complaint against Amazon, opens a second probe over the e-commerce platform
The European Union on Tuesday said it issued a statement of objections against Amazon over practices it has implemented while serving as both a marketplace platform and seller, which the EU said the company has used to make “strategic business decisions to the detriment of the other marketplace sellers.” Amazon shares fell 2% in early trading.
“The Commission’s preliminary view, outlined in its Statement of Objections, is that the use of non-public marketplace seller data allows Amazon to avoid the normal risks of retail competition and to leverage its dominance in the market for the provision of marketplace services in France and Germany – the biggest markets for Amazon in the EU,” the EU said in a statement. “If confirmed, this would infringe Article 102 of the Treaty on the Functioning of the European Union (TFEU) that prohibits the abuse of a dominant market position.”
The statement of objections does not mark the end or the outcome of an investigation or suggest any fines or changes to Amazon’s business model that the EU might eventually demand. It does, however, raise the specter of further action against the company.
The EU also announced it opened a second antitrust investigation over whether Amazon’s business practices “might artificially favor its own retail offers and offers of marketplace sellers that use Amazon’s logistics and delivery services (the so-called ‘fulfillment by Amazon or FBA sellers’).”
6:01 p.m. ET Monday: Stock futures open higher amid lingering vaccine optimism
Here were the main moves in markets, as of 6:01 p.m. ET Monday evening:
S&P 500 futures (ES=F): 3,556.00, up 12 points or 0.34%
Dow futures (YM=F): 28,153.00, up 105 points or 0.36%
Nasdaq futures (NQ=F): 11,882.25, up 61.75 points or 0.52%
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