NEW YORK: Wall Street's three major indexes hit record highs on Monday as the first positive data from a late-stage COVID-19 vaccine trial prompted hopes that an economic recovery from the pandemic-driven crisis was finally in sight.
Oil prices surged more than 8per cent and pushed up energy stocks while U.S. Treasuries sold off after U.S. drugmaker Pfizer and its German partner BioNTech said a large-scale trial of their vaccine showed it was more than 90per cent effective in preventing COVID-19.
Saturday's news that Joe Biden had won the U.S. presidential election was also a reassuring confirmation of what investors had already been counting on by the end of last week, according to market strategists.
"Election uncertainty is fading into the rearview mirror. Now we have this boost of investor enthusiasm after the vaccine news," said to Michael Antonelli, market strategist at Baird in Milwaukee. "All the types of companies that would benefit from us returning to a pre-COVID world are the big winners today."
Sectors such as energy, travel and financials which were among the hardest hit by lockdowns aimed at curbing the virus were the biggest percentage gainers on Monday.
While the vaccine study is still ongoing, Pfizer and BioNTech said they had found no serious safety concerns so far and expected to seek U.S. emergency use authorization later this month.
"It's not that we're out of the woods with COVID. It's that the vaccine starts to remove the worst case scenario that we surge out of control and go back into a national lockdown," said Antonelli. "The market's looking into the future, to the first and second quarter of next year."
At 2:42 p.m. EST (1942 GMT), the Dow Jones Industrial Average rose 1,265.57 points, or 4.47per cent, to 29,588.97, the S&P 500 gained 94.72 points, or 2.70per cent, to 3,604.16 and the Nasdaq Composite added 12.37 points, or 0.1per cent, to 11,907.60.
The S&P energy index, up 15per cent, was on course for its biggest daily percentage gain since March as investors bet demand would climb again when people become more comfortable with the idea of traveling as the health crisis subsides.
Also, bank shares, often seen as a proxy for the broader economy, jumped about 14per cent.
The companies hit hardest by months of travel bans and lockdowns soared. the NYSE airlines index was up 19per cent while plane maker Boeing Co jumped 15per cent. Cruise line operator Carnival Corp was up more than 32per cent.
In contrast, the technology sector and specific companies that had outperformed during the pandemic as they were seen as "stay-at-home" winners were making smaller gains or declining.
Netflix Inc fell 6.6per cent and Amazon.com Inc 2.8per cent, while Zoom Video fell more than 14per cent and exercise bike maker Peloton Interactive Inc PTON.O> plunged 15.6per cent, limiting the Nasdaq's.
Stocks around the world scaled a record high earlier in the day and the dollar remained weak as expectations of better global trade ties and more monetary stimulus under President-elect Biden also lifted demand for risky assets.
Biogen Inc slumped about 27.7per cent as a panel of experts to the U.S. health regulator voted against the drugmaker experiment Alzheimer's treatment.
Advancing issues outnumbered declining ones on the NYSE by a 4.12-to-1 ratio; on Nasdaq, a 2.44-to-1 ratio favored advancers.
The S&P 500 posted 140 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 244 new highs and 23 new lows.
(Additional reporting by Medha Singh and Shivani Kumaresan in Bengaluru; Editing by Shounak Dasgupta, Arun Koyyur, Patrick Graham and Tom Brown)