Dow opens up 200 points on another jab of promising vaccine news

Wall Street’s main stock indexes pushed higher on Monday kicking off another week on a shot of positive vaccine news – this time from AstraZeneca and Oxford University.

The Dow Jones Industrial Average jumped more than 197 points, or 0.67 percent, to 29,460.95 at the open of trading in New York.

The broader S&P 500 index – a proxy for the health of retirement and college savings accounts – gained 0.59 percent and the Nasdaq Composite Index vaulted 0.55 percent.

Positive trial results in the race for a COVID-19 vaccine have been buoying stocks this month.

On Monday, UK drug giant AstraZeneca said an interim analysis of trials of its COVID-19 vaccine it is developing with Oxford University showed it to be 70 percent to 90 percent effective depending on the dosage.

The news followed on from encouraging late-stage trial results from Pfizer and BioNTech that its jab is 95 percent effective, and trial data from Moderna that showed its vaccine to be 94.5 percent effective.

The sudden blitz of promising results is raising hopes that a pandemic game-changer is in the offing, though any vaccine that receives approval from regulators will not be widely available for months.

In the interim, new cases of COVID-19 and related hospitalisation continue to set records.

The United States registered 142,732 new confirmed coronavirus cases and 921 deaths on Sunday, according to the Johns Hopkins University.

The surge of infections is weighing on the nation’s economic recovery, as state and local governments reintroduce business-sapping lockdown restrictions and curfews.

California announced on Monday that it would suspend all indoor dining and impose a statewide curfew. New York City shuttered all public schools on Thursday and warned that it could slash up to 40 percent of its subway service.

The reintroduction of containment measures is redoubling calls for Washington to overcome its partisan differences and pass a new round of stimulus measures to ease the burden on struggling households and businesses and keep the recovery on the rails.

“The virus situation and fiscal negotiations present the two largest near-term downside risks. Failure to reach a fiscal agreement by the end of Q1 or widespread and more stringent virus restrictions could lead to outright contraction in Q1,”  Goldman Sachs analysts wrote in a note over the weekend.

Indeed, hopes that Washington would pass a new virus relief aid package were dealt a serious blow last week after Treasury Secretary Steven Mnuchin on Thursday announced that he would end some of the Federal Reserve’s pandemic lending programmes.

In the last several weeks, vaccine news has lifted shares beaten down by the pandemic such as airlines and cruise operators as investors position portfolios for those industries to revive once a vaccine is available.

But the near-term challenges of the pandemic keep vying for investor sentiment.

“Beyond the next few months, the growing likelihood that effective vaccines soon start to be deployed has brightened the outlook for those countries that have struggled to contain the virus,” Neil Shearing, chief economist at Capital Economics, said in a Monday note. “But we need to be careful how this is interpreted: rapid growth next year needs to be viewed in the context of large falls in output this year.”

Other COVID-related stocks to watch on Monday:

Shares of drugmaker Regeneron Pharmaceuticals Inc gained 1.9 percent as the US Food and Drug Administration gave Emergency Use Authorization to its COVID-19 antibody cocktail therapy.