Stocks Bounce Back On Virus News

European and US stocks were boosted Wednesday by news that several million doses of a new coronavirus vaccine could be on the way.

More reassuring comments from US Federal Reserve Chair Jerome Powell that inflation will remain tame and interest rates low also helped cheer markets.

Wall Street recovered from early losses, with the benchmark Dow Jones Industrial Average jumping 1.4 percent to close at a new all-time high, and the tech-rich Nasdaq rebounding from two days of declines.

After spending much of the day in negative territory, the London stock index closed 0.5 percent higher, while Frankfurt and Paris also gained ground.

Markets were spooked in recent days by the steady upward climb of yields on US Treasury debt, a red flag for rising inflation and borrowing rates.

That suggests "financial markets are much more optimistic about the economy" than the Fed, said Edward Moya, a senior market analyst at the online broker OANDA.

"Powell is strongly optimistic about the economic outlook for the second half of the year, while the Treasury market seems to indicate that the recovery could take off in the second quarter," Moya said.

Powell delivered a second day of testimony before Congress where he said prices may rise as the economy recovers, but that does not mean inflation will take hold.

"We do expect inflation to move up" in part "because we could have a surge in spending as the economy reopens," Powell said.

However, "that's a different thing from persistent high inflation which we do not expect and if we do get, then we have the tools to deal with it."

Financial markets bounced higher after the US Food and Drug Administration (FDA) appeared ready to approve a single-shot Covid-19 vaccine developed by Johnson & Johnson.

If so, a White House official said the administration planned to distribute at least three million vaccine doses next week.

Documents released by the FDA indicated the vaccine had proven highly effective against severe cases of Covid-19 in Brazil, South Africa and the US.

"Basic refrigeration and the fact that it is a single dose vaccine could be a game-changer in the global fight against COVID," Moya noted.

Oil prices climbed well beyond the 13-month peaks reached Tuesday.