Dow jumps 470 points to a record as another potentially effective vaccine fuels recovery hope

U.S. stocks jump after Moderna says its Covid vaccine is 94.5% effective — Here's what experts say to watch
U.S. stocks jump after Moderna says its Covid vaccine is 94.5% effective — Here's what experts say to watch

U.S. stocks rose on Monday after preliminary coronavirus vaccine data from Moderna further lifted expectations of a strong economic recovery.

The Dow Jones Industrial Average gained 470.63 points, or 1.6%, to close at 29,950.44. The 30-stock Dow logged intraday and closing record highs. The S&P 500 climbed 1.2% to 3,626.91, posting an all-time closing high. The Nasdaq Composite advanced 0.8% to 11,924.13.

Stocks that would benefit from the economy reopening led the way higher. United Airlines was up 5.2%, and Carnival closed 9.7% higher. Bank stocks such as Citigroup and Wells Fargo gained more than 3% each and JPMorgan Chase advanced 2.8%. Moderna shares jumped 9.5% on the day.

Shares of companies that have thrived during the pandemic as people spend more time at home lagged the boarder market. Netflix slid 0.8%. Amazon shares closed flat.

Moderna said Monday that its coronavirus vaccine was more than 94% effective during a late-stage trial. The promising announcement makes the Massachusetts-based biotech firm the second drugmaker to say it has a potentially effective vaccine.

Similar trial results last week from Pfizer and BioNTech drove investors into underperforming names dependent on a vaccine reopening the economy. The companies said at the time that their candidate was more than 90% effective in preventing Covid-19 among participants.

A vaccine "turns what could have been a prolonged crisis into something closer to a natural disaster (large shock, swift recovery)," TS Lombard analysts Steven Blitz and Andrea Cicione wrote in a note. "Without an effective vaccine, current EPS consensus expectations (pointing to a return to trend by the end of next year) would be on the optimistic side. But with one, they may actually come to pass."

Wall Street was coming off a mixed weekly performance in which beaten-down value names led the way higher at the expense of high-flying growth names. The Dow climbed 4% last week, and the S&P 500 notched a 2.2% one-week gain. The Nasdaq Composite lagged, however, sliding 0.6%.

The iShares Russell 1000 Value exchange-traded fund (IWD) rallied 5.7% last week while its growth counterpart, the iShares Russell 1000 Growth ETF (IWF) slid 1.2%. Value continued to outperform on Monday, with IWD gaining 1.9% and IWF advancing just 0.5%.

"Encouraging vaccine news continues to support pro-cyclical and value sectors, which have seen strong relative performance this month after a period of historic underperformance," said Mark Hackett, chief of investment research at Nationwide, wrote in a note. "Supporting this rotation is the prospect for additional stimulus, continued improvement in earnings, a historic valuation gap and the prospect for improving global trade under a Biden administration."

"By and large, investors are taking a glass-half-full view of the markets right now," he added.

Medical syringe is seen with Moderna company logo displayed on a screen in the background in this illustration photo taken in Poland.
Jakub Porzycki | NurPhoto | Getty Images

Traders were also excited on Monday after Moderna said its vaccine remains stable at 36 to 46 degrees Fahrenheit, the temperature of a standard home or medical refrigerator, for up to 30 days. It can be stored for up to six months at negative 4 degrees Fahrenheit. By comparison, Pfizer's vaccine requires a storage temperature of minus 94 degrees Fahrenheit.

To be sure, the number of coronavirus cases is still rising, thus threatening the prospects of a swift economic recovery.

More than 11 million Covid-19 infections have been confirmed in the U.S., according to data from Johns Hopkins University. Data from the COVID Tracking Project also showed that a record of more than 69,000 people in the U.S. are hospitalized with the coronavirus.

Dan Russo, chief market strategist at Chaikin Analytics, thinks the market can weather this latest spike in coronavirus cases, however.

"It seems that investors are more focused on vaccine news and are willing to look past the near-term spike in cases," he said in a post. "If this becomes a cause for concern for investors, it will become apparent on the charts and risk management will take over."

Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.