Wall Street rallied on Monday, and the Nasdaq reached an all-time closing high, as sentiment was boosted by full FDA approval of a COVID-19 vaccine and market participants looked ahead to the Jackson Hole Symposium expected to convene later this week. The TSX also rose, with the help of a big boost in energy and materials stocks as commodities rallied.
All three major U.S. stock indexes ended the session sharply higher, with surging crude prices, driven by expected demand growth, putting energy shares out front.
“This has been the script all along,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. “We make new highs, pull back, and then we’re off to the races again.”
“That tells me the fundamentals are in place,” Cardillo added. “There’s worries out there, but it’s hard to keep this market down.”
The U.S. Food and Drug Administration (FDA) granted full approval to the COVID-19 vaccine developed by Pfizer Inc and BioNTech SE in a move that could accelerate inoculations in the United States.
“Full approval means that there’s most likely going to be more mandates, more companies will mandate that you have to get the vaccine in order to get back to the office,” Cardillo said. “I don’t think this will get all the doubters vaccinated but this news today will probably drive (the vaccinated rate) closer to 75% [in the U.S.]”
Pfizer and U.S.-listed shares of BioNTech advanced 2.5% and 9.6%, respectively. Rival Moderna Inc gained 7.5%.
Spiking COVID-19 infections caused by the highly contagious Delta variant have fueled concerns over a protracted recovery from the global health crisis.
Data released on Monday painted a mixed portrait of an economy inching back to normal in the wake of the most abrupt contraction in history.
Sales of pre-owned homes unexpectedly increased in July, according to the National Association of Realtors, while a report from IHS Markit showed business activity accelerating this month.
The “Goldilocks” portrait of an economic recovery headed in the right direction, but not robust enough to warrant a change in the Federal Reserve’s dovish monetary policy, helped feed investor risk appetite.
Market participants look to the Jackson Hole Symposium, due to convene in Wyoming later this week. Fed Chairman Jerome Powell’s comments will be closely parsed for clues regarding the central bank’s policy-tightening timeline.
The S&P/TSX Composite Index rose 138.24 points, or 0.68%, at 20,477.26. The energy sector spiked 3.61% and materials 2.86%. Sector performance was otherwise mixed and lacklustre, except for health-care. It shot up thanks to Trillium Therapeutics Inc. soaring 184.51% after Pfizer agreed to buy the cancer drug developer in a US$2.26 billion deal.
The Dow Jones Industrial Average rose 215.63 points, or 0.61%, to 35,335.71, the S&P 500 gained 37.86 points, or 0.85%, to 4,479.53 and the Nasdaq Composite added 227.99 points, or 1.55%, to 14,942.65.
Of the 11 major sectors in the S&P 500, seven ended the session green, with energy enjoying its best day in nearly two months.
Exxon Mobil Corp and Chevron Corp gained 4.1% and 2.6%, respectively.
Advancing issues outnumbered declining ones on the NYSE by a 2.46-to-1 ratio; on Nasdaq, a 2.81-to-1 ratio favored advancers. The S&P 500 posted 57 new 52-week highs and 1 new low; the Nasdaq Composite recorded 108 new highs and 54 new lows. Volume on U.S. exchanges was 8.63 billion shares, compared with the 9.15 billion average over the last 20 trading days.
Oil prices rose more than 5%, as a weaker U.S. dollar and strong global equities markets boosted crude futures after seven sessions of declines.
Brent crude climbed $3.57, or 5.5%, to end the session at $68.75 a barrel after touching its lowest since May 21 at $64.60 during the session.
U.S. West Texas Intermediate (WTI) crude for October delivery rose $3.50, or 5.6%, to settle at $65.64.
Both benchmarks marked their biggest week of losses in more than nine months last week, with Brent sliding about 8% and WTI about 9%.
But a drop in the U.S. dollar provided a boost on Monday, making crude less expensive for holders of other currencies.
“Although the oil complex has generally been able to shrug off strength in the stock market, the bullish combo of increased risk appetite and significant weakening in the U.S. dollar indices represents a potent mix that oil has been forced to recognize” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
The dollar index, which measures the currency against six peers, was down 0.4% after hitting its highest level in more than nine months on Friday.
The MSCI world equity index, which tracks shares in 50 countries, was up, after having its biggest weekly fall since June last week.
Still, many nations are responding to the rising coronavirus infection rate by introducing new travel restrictions.
The Canadian dollar traded for 78.85 cents US compared with 77.78 cents US on Friday.
Safe-haven gold vaulted over the key $1,800 psychological level on Monday as the retreat in the greenback pushed investors to seek refuge in bullion even as expectations on Fed tapering eased.
Spot gold was up 1% at $1,802.7600 per ounce, after hitting its highest since Aug. 5.
Reuters, Globe staff
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