Stocks rose on Wednesday, boosted by news of a coronavirus vaccine deal between the U.S. government and Pfizer and BioNTech and apparent progress on U.S. stimulus negotiations.
The Dow Jones Industrial Average gained 165.44 points, or 0.6%, to close at 27,005.84. It was the Dow's third straight gain. The S&P 500 rose 0.6% to 3,276.84, posting a four-day winning streak, and the Nasdaq Composite advanced 0.2% to 10,706.13. The S&P 500 also traded at its highest level in five months.
The U.S. agreed to pay Pfizer and German-partner BioNTech $1.95 billion to produce 100 million coronavirus vaccines if it proves to be safe and effective. The Department of Health and Human Services added the U.S. can acquire an additional 500 million doses of the drug under the agreement.
Pfizer rose more than 5%. BioNTech's U.S.-listed shares gained 13.7%.
"Typically, it takes roughly a decade for a new vaccine to go through the various stages of development and testing," said Ed Yardeni, chief investment strategist at Yardeni Research, in a note. "However, the urgency of the pandemic ... has resulted in a mobilization of global medical resources rarely seen before in human history. Billions of dollars, provided by both the public and the private sectors, are funding the global campaign to develop tests, vaccines, and cures for the virus."
"But the next phase will be critical to demonstrate that the potential vaccines can protect against infections," he said.
Stocks got a boost in the final hour after sources told CNBC that Republicans are considering extending current unemployment benefits at $400 per month through December. That would be lower than the current unemployment benefits of $600 per week.
Market sentiment was kept in check earlier in the session after the U.S. State Department abruptly ordered China to close its consulate in Houston. Foreign ministry spokesperson Wang Wenbin condemned the action and warned of firm countermeasures if the U.S. does not reverse its decision. The closure comes as relations between the two largest world economies have deteriorated during the coronavirus pandemic.
Dan Deming, managing director at KKM Financial, also said there may be some "apprehension" in the market amid the heightened civil unrest across the U.S. "Those are legitimate concerns, but they have not had much of an impact at this point because the overwhelming focus is on the stimulus that came from the [European Union] and the U.S. package that's currently being worked on."
Traders also braced for the latest earnings reports from Microsoft and Tesla, which were set for release after the bell.
Microsoft has been one of the market stalwarts this year during the pandemic, surging more than 30% in that time period. Wall Street is also awaiting Tesla's results, which could make the company qualify to become an S&P 500 constituent.
Shares of United Airlines dipped 4.2% after the company reported a net loss of $1.62 billion for the second quarter. The coronavirus pandemic's impact on travel fueled an 87% year-over-year revenue decline for the Chicago-based airline.
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Correction: This story has been updated to reflect Ed Yardeni's title is chief investment strategist.