Dow surges more than 900 points in best day since early April amid hope for coronavirus vaccine
Wall Street logged its best day in over a month on Monday as news from a Moderna trial stoked optimism about a potential coronavirus vaccine.
The Dow Jones Industrial Average closed 911.95 points higher, or 3.9%, at 24,597.37. The S&P 500 gained 3.2% to close at 2,953.91 while the Nasdaq Composite advanced 2.4% to 9,234.83. The Dow and S&P 500 both had their biggest one-day gains since April 6 while the Nasdaq posted its best rally since April 29. The S&P 500 also closed at its highest level since March 6.
Moderna shares rallied 20% after the company reported "positive" phase one results for a potential coronavirus vaccine. The company said that after two doses all 45 trial participants had developed coronavirus antibodies.
"This information coming out of Moderna takes a little bit of the unknown out of the market," said Christian Fromhertz, CEO of The Tribeca Trade Group. "So there's a knee-jerk reaction that's going on with all those names that have been under pressure." Fromhertz referred to those stocks as "have-nots."
"I think that's just how it's going to work," said Fromhertz. "The closer they get to reopening the country, the more this is going to be beneficial for the 'have-nots' and there's going to be more profit taking in some of the 'haves.'"
Disney closed 7.15% higher while MGM Resorts rallied 10.5%. Cruise operator Carnival gained 15.2%. Delta and United Airlines both rose more than 13%. Netflix — a stock that has benefited from people staying at home — closed 0.3% lower.
Bank stocks rose broadly. Wells Fargo jumped more than 8% while Bank of America and Citigroup both closed over 6% higher. JPMorgan Chase advanced 5.3%.
Comments from the Federal Reserve chief also added to the bullish sentiment.
Federal Reserve Chairman Jerome Powell said to CBS' "60 Minutes" that "there's a lot more we can do" to help the economy. "We've done what we can as we go. But I will say that we're not out of ammunition by a long shot. No, there's really no limit to what we can do with these lending programs that we have."
The central bank leader also said he's "highly confident" the U.S. economy will claw its way back from the current pullback, but warned that it may not fully recover until a Covid-19 vaccine is complete.
The Nasdaq Composite and S&P 500 fell 1.1% and 2.2%, respectively, last week with the latter notching its worst week since March. The Dow finished the week down 2.65% for its third negative week in four and its worst week since April 3.
Wall Street's veteran investors say stocks could be in for choppy trading until it's clear that state efforts to reopen their economies aren't met with significant spikes in new cases of Covid-19. This weekend most states either partially or completely ended lockdowns.
"The focus moving forward will be on the opening of the economy, how quickly can it be done and how safely can it be done," said Quincy Krosby, chief market strategist at Prudential Financial. That's why those announcements on "therapeutic curative treatments and vaccines are going to be very important."
—CNBC's Jeff Cox and Patti Domm contributed reporting.
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