Stocks finished higher Monday following a volatile week on Wall Street, led by reopening stocks as the Food and Drug Administration approved its first Covid-19 vaccine.
The S&P 500 added 0.8% to reach 4,479.53, just shy of a record close. The tech-heavy Nasdaq Composite rose about 1.5% to 14,942.65 to hit a record closing high. The Dow Jones Industrial Average gained 215.63 points, or 0.6%, to 35,335.71.
Shares of vaccine makers jumped on Monday after the FDA granted full approval for the two-dose Pfizer-BioNTech vaccine for Covid-19. Pfizer shares rose 2.4%. Its partner BioNTech's stock jumped 9.5% and Moderna climbed 7.5%. Trillium Therapeutics soared 188% on news that it'll be acquired by Pfizer.
Travel and leisure stocks reacted positively to the news, with Delta and American Airlines advancing 2.8% and 3.3%, respectively. Carnival gained 3.9%, and Norwegian Cruise Line climbed 4.2%.
Energy stocks led the gains as oil prices jumped Monday and snapped its longest losing streak since 2019. Diamondback Energy gained 5.9%, and Devon Energy added 6%. Occidental Petroleum rose 6.9%.
The immediate impact of the FDA approval of the Pfizer vaccine on efforts to combat the virus could be muted until the U.S. population reaches herd immunity, which "will be a while," said Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
However, "to the extent that the general public becomes more comfortable living with the virus, the economy is likely to continue on its upward trajectory," he said. "The economic recovery is what is driving corporate earnings and the stock market to all-time highs, and we expect that to continue through 2021 and into 2022.
Consumer discretionary and retail companies are most likely to benefit from the news, Zaccarelli said, while utilities and consumer staples are likely to underperform, as the market moves higher on increased reopening hopes.
The major averages were coming off a losing week as investors grew worried that the Federal Reserve's potential move to pull back monetary stimulus could slow down the economic recovery that is already challenged by the spread of the delta Covid-19 variant.
"Markets may take a breather after their recent run, but strong Q2 results have provided a fundamental justification and reinforced our confidence in the sustainability of the recovery," according to Barclays.
As reopening trades resurface, traders are eagerly awaiting the Jackson Hole symposium for clues on the Fed's timeline for dialing back its $120 billion a month bond-buying program. The event, originally scheduled as an in-person gathering, will now take place virtually on Thursday and Friday for the second year in a row.
"Given the recent deterioration in incoming data and the pandemic situation, we see some risk Powell focuses on increased uncertainty due to the latest Covid-19 surge," Nomura economist Aichi Amemiya said in a note. "At a minimum, we view recent comments from Fed officials as supporting our view of a December tapering announcement despite a preference on the FOMC for November as of the July meeting."