S&P 500 rises to start the new quarter, tech leads Nasdaq Composite to record close
The S&P 500 and Nasdaq Composite started the new quarter with solid gains on Wednesday, with market sentiment getting a lift from positive coronavirus vaccine news and strong U.S. economic data.
The S&P 500 closed 0.5% higher at 3,115.86. The tech-heavy Nasdaq Composite posted a record closing high, rising 0.95% to 10,154.63. The Nasdaq-100 index — which is made up of the composite's 100-largest nonfinancial stocks —jumped more than 1% to an all-time high and closed at 10,279.25. The Dow Jones Industrial Average lagged, falling 77.91 points, or 0.3%, to 25,734.97.
A study of a coronavirus vaccine candidate being developed by Pfizer and BioNTech showed the drug created neutralizing antibodies. The results were released online, but have not been reviewed by a medical journal yet.
"We are encouraged by the clinical data of BNT162b1, one of four mRNA constructs we are evaluating clinically, and for which we have positive, preliminary, topline findings," said Kathrin U. Jansen, head of vaccine research and development at Pfizer, in a release.
The company also said that, if the vaccine gets regulatory approval, it expects to make up to 100 million doses by year-end and "potentially" more than 1.2 billion by the end of 2021. Pfizer shares jumped 3.2% on the news and BioNTech's U.S.-listed shares fell 3.9%, erasing earlier gains into the close.
CNBC's Jim Cramer said on "Squawk on the Street" that Pfizer is seen as credible so investors will like the news. "This is highly unlike Pfizer ... I, frankly, don't want to accept it like this, but the market will and it's kind of a saved-by-Pfizer market from where we were," said Cramer.
Pfizer and BioNTech's news comes as more than 12 states have now paused or rolled back their reopenings, with cases in the U.S. jumping 40% over the past week to an average of about 39,750 on Monday, according to a CNBC analysis of data compiled by Johns Hopkins University.
Arizona on Wednesday reported nearly 4,900 additional coronavirus cases and 88 new deaths, a record-high single-day jump. California also reported a record spike in new coronavirus cases. Apple, meanwhile, erased earlier gains and closed 0.2% lower after announcing it will re-close 30 more stores do to the resurgence in virus cases.
White House health advisor Dr. Anthony Fauci warned Tuesday that if the outbreak continues at its current pace, daily new cases could surpass 100,000 new infections per day.
Shares of Amazon and Netflix — companies that benefit from people staying at home — led the way higher, rising 4.4% and 6.7%, respectively. FedEx was the best-performing stock in the S&P 500, rallying 11.7% on the back of stronger-than-forecast earnings.
"We just see this ongoing push-and-pull between reopening [the economy] and the virus," said Tom Hainlin, global investment strategist at Ascent Private Capital Management. "We got some positive early stage vaccine data from Pfizer, but you've got Google and Citigroup, among other companies, saying they're going to slow down our process of getting people back to the office because of this resurgence."
Wall Street was coming off its best quarterly performance in decades. The Dow gained 17.8% in the second quarter, posting its best quarter since 1987, while the S&P 500 finished the period with a near 20% gain, its best since 1998. The tech-heavy Nasdaq soared 30.6% for the quarter, the most since 1999.
"We continue to expect it to be an uneven process, albeit with a positive trajectory," Keith Lerner, chief market strategist at SunTrust Advisory Services, said in a note. "The good news is through this digestion period, markets are working off some of the excesses that had built up, and elevated expectations are being reset."
Big ADP revision and manufacturing jump
ADP and Moody's Analytics said private payrolls jumped by 2.37 million in June. Payrolls for May were also revised to a gain of more than 3 million from a loss of 2.76 million.
Meanwhile, The Institute for Supply Management said U.S. manufacturing activity grew to its highest level since April 2019, recovering from a sharp contraction in May.
"Looking ahead, we will likely see continued improvement in July," said Thomas Simons, money market economist at Jefferies, regarding the manufacturing data. "The recent spikes in COVID cases in various states across the country have only very recently resulted in walk-backs of reopening plans, and the majority of those policy changes have focused on social settings rather than anything to do with manufacturing."
Those data sets were released ahead of the U.S. government's monthly jobs report, which is scheduled for release Thursday at 8:30 a.m.
To be sure, the Federal Reserve's June meeting minutes showed the central bank thinks the economy will need monetary policy support "for some time" as the country tries to recover from the pandemic.
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