Monday’s Stock Market Close: US Equities Surge On Hopes For Promising Coronavirus Vaccine, Yields Jump

U.S. stocks soared on Monday after biotech firm Moderna (MRNA) reported some promising news on its Covid-19 vaccine. Traders were also cheered by comments from Federal Reserve Chairman Jerome Powell who said the U.S. economy will recover from the coronavirus pandemic.

The Dow Jones Industrial Average surged 911.95 points to 24,597.37, while the S&P 500 gained 90.21 points to 2,953.91 and the Nasdaq Composite Index advanced 220.27 points to 9,234.83.

Moderna said on Monday morning that its early-stage human trial for a coronavirus vaccine produced Covid-19 antibodies in all 45 participants of the trial.

Moderna shares skyrocketed 20% on Monday.

“The focus moving forward will be on the opening of the economy, how quickly can it be done and how safely can it be done,” said Quincy Krosby, chief market strategist at Prudential Financial. “Therapeutic curative treatments and vaccines are going to be very important.”

“This information coming out of Moderna takes a little bit of the unknown out of the market,” said Christian Fromhertz, CEO of The Tribeca Trade Group. “So there’s a knee-jerk reaction that’s going on with all those names that have been under pressure.”

Speaking about the U.S. economy and Fed policy, Jerome Powell said on Sunday night’s broadcast of CBS’ “60 Minutes” program: “There’s a lot more we can do. We’ve done what we can as we go. But I will say that we’re not out of ammunition by a long shot. No, there’s really no limit to what we can do with these lending programs that we have.”

However, Powell also said the U.S. economy could contract by up to 30% in the second quarter, while the jobless rate may reach as high as 25%.

But he expects a recovery in the third quarter, thereby avoiding a Depression scenario.

“I don’t think [a second Depression is] a likely outcome at all. There’re some very fundamental differences,” he said. “I think there’s a good chance that there’ll be positive growth in the third quarter. And I think it’s a reasonable expectation that there’ll be growth in the second half of the year. I would say though we’re not going to get back to where we were quickly. We won’t get back to where we were by the end of the year. That’s unlikely to happen.”

Powell added: “So in the long run, I would say the U.S. economy will recover. We’ll get back to the place we were in February; we’ll get to an even better place than that. I’m highly confident of that. And it won’t take that long to get there.“

The National Association of Home Builders/Wells Fargo housing market index (which measures builders confidence) rose by 7 points in May to 37, after a historic plunge in April.

“The designation of home construction as an essential business during the [coronavirus] crisis helped keep most residential construction workers on the job, which is reflected in the May [index], NAHB stated. “At the same time, builders are showing flexibility in this new business environment by making sure buyers have the knowledge and access to the homes they are seeking through innovative measures such as social media, virtual tours and online closings.”

Overnight in Asia, markets climbed higher. The Shanghai Composite edged up 0.24%; Hong Kong’s Hang Seng gained 0.58%; while Japan’s Nikkei-225 rose 0.48%.

In Europe markets surged, as Britain’s FTSE-100 gained 4.29%, while France’s CAC-40 climbed 5.16% and Germany’s DAX rose 5.67%.

Crude oil futures soared 10.16% at $32.42 per barrel, Brent crude rose 1.12% at $35.20. Gold futures fell 1.29%.

The euro rose 0.92% at $1.0918 while the pound sterling gained 0.76% at $1.2198.

The yield on the 10-year Treasury jumped 16.25% to 0.744% while yield on the 30-year Treasury surged 10.54% to 1.458%.