NEW YORK, Nov 10 ― Shares of stocks that have been demolished as the coronavirus and related lockdowns have crippled the global economy surged yesterday following positive news from Pfizer and its German partner BioNTech about is experimental Covid-19 vaccine.
Pfizer shares jumped 10.16 per cent, although they were off earlier highs, after the company said the vaccine was more than 90 per cent effective in a large-scale clinical trial for which it will now seek a US emergency use authorisation. US-listed shares of BioNTech were up 9.89 per cent.
While Pfizer shares were higher on the news, the overall healthcare sector was underperforming the broader S&P 500, in large part due to a sharp decline in Biogen after a US Food and Drug Administration panel voted against its Alzheimer’s treatment.
The energy sector, down more than 50 per cent through Friday's close as reduced travel sapped demand for oil and gas, shot up 14.82 per cent and was on track for its biggest daily percentage gain since March 24. Exxon Mobil gained 13.39 per cent and Valero Energy soared 29.81 per cent.
Banks, down more than 34 per cent through Friday, climbed 12.66 per cent and were also on track for their biggest one-day percentage gain since March 24 as bond yields soared and the US yield curve steepened. A similar reaction was seen in Europe, with French banks Societe Generale and BNP Paribas, closing up 18 per cent.
“It's all about the vaccine. If Pfizer's vaccine is as good as people are saying it is that's a game changer for consumer behaviour and a lot of the trends we've seen of the cyclical sectors being depressed are going to reverse on that hope that this is the beginning of the end of our dealing with Covid-19,” said Chris Zaccarelli, Chief Investment Officer, Independent Advisor Alliance, Charlotte, North Carolina.
Airlines, down more than 45 per cent through Friday, jumped 15.22 per cent, led by gains in Delta Air Lines, up 15.07 per cent and Southwest Airlines as a vaccine would reduce the fear of travelling in an enclosed space.
Other travel-related stocks also moved higher. Disney rose 11.29 per cent while fellow theme-park operator Six Flags advanced 17.07 per cent.
The S&P hotels, restaurants & leisure index shot up 5.43 per cent with cruise lines Carnival Corp and Royal Caribbean each surging more than 30 per cent higher. Casino operator Wynn Resorts rose 26.26 per cent while hotel operators Marriott International and Hilton Worldwide each gained more than 10 per cent.
Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago, said the news was particularly good for companies in services industries. “The services part of the economy can recover strongly,” he said.
“It's affecting services across the board,” he said, noting strong gains in Disney, Expedia and other travel-related stocks.
On the flip side, names that have benefited from work-from-home policies and travel restrictions, as Peloton Interactive and Zoom Video tumbled 15.55 per cent and 13.48 per cent, respectively. ― Reuters
