Wednesday 25 August 2021

S&P 500 and Nasdaq hit record highs with oil and travel-related stocks extending gains as full approval of Pfizer vaccine sparks hopes of a quicker economic recovery

 Wall Street closed at record highs following the FDA's full approval of the Pfizer COVID-19 vaccine, with oil and travel-related stocks seeing significant boosts after long being stymied by the pandemic. 

The vaccines approval marks the hope that more unvaccinated people will get the shot, boosting people's confidence in travel and spending while diminishing the threat of another shutdown. 

The S&P 500 and Nasdaq, which together list the stock value of more than 3,800 of America's biggest publicly-traded companies, both closed at an all time high on Tuesday.

The S&P 500 gained 6.7 points, or 0.15%, to close at 4,486.23, and the Nasdaq Composite added 77.15 points, or 0.52%, to close at 15,019.80. 

Rises in the value of shares traded on both indexes is widely seen as a sign of an improving economy. 

'We have energy, retail, travel, leisure, financials, and small caps all doing well today,' said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina. 'And that´s a sign that the reopening is alive and well.' 

The session marked the S&P 500's 50th record high close so far this year

The session marked the S&P 500's 50th record high close so far this year

The Nasdaq Composite lists the market value of more than 3,800 publicly traded companies

The Nasdaq Composite lists the market value of more than 3,800 publicly traded companies

The recent boost come just ahead of Thursday's Jackson Hole Symposium in Wyoming, where Federal Reserve Chairman Jerome Powell is expected to discuss the U.S. economy's recovery. 

'Investors are looking at the big Jackson Hole meeting on the horizon,' Detrick added. 'But for now the feel-good from yesterday´s vaccine news is still in the air.'

The FDA's approval of the Pfizer-BioNTech COVID-19 vaccine on Monday fueled optimism over economic recovery which spilled into Tuesday's session.

It was granted emergency approval in December 2020, and has been widely-administered since. 

But health experts - including White House COVID tsar Dr. Anthony Fauci - hope this new 'gold standard approval' could encourage up to 30% of Americans who are still unvaccinated to finally have the shot. 

Travel and leisure sectors, associated with economic re-engagement, outperformed the broader market. The S%P 1500 Airline and Hotel/Restaurant/Leisure indexes gained up 3.7% and 1.6%, respectively.

American Airlines saw a 3.77% increase, and United Airlines enjoyed a nearly 3.5% increase. 

United Airlines saw a steady boots of nearly 3.5% at the end of Tuesday

United Airlines saw a steady boots of nearly 3.5% at the end of Tuesday

American Airlines saw one of the biggest boosts in the travel industry by closing time

American Airlines saw one of the biggest boosts in the travel industry by closing time

The approval of the vaccine could boost further confidence in air travel. Pictured, passengers aboard a JetBlue ride from London to New York.

The approval of the vaccine could boost further confidence in air travel. Pictured, passengers aboard a JetBlue ride from London to New York. 

Energy was the top gainer among the 11 major sectors in the S&P 500, boosted by the continued rally in crude oil prices. 

Chevron Corp and Exxon Mobile Corp., which had seen seeing steady loses in the summer, are now up by another 1% and 0.8%, respectively. 

Recent economic indicators suggest the recovery from the most abrupt recession in U.S. history is headed in the right direction, but not to the extent that is likely to prompt the Federal Reserve to tighten its dovish monetary policy, which has seen trillions of dollars printed for stimulus relief. 

Chevron Corp is seeing a steady recovery, ending today at 1.13% higher

Chevron Corp is seeing a steady recovery, ending today at 1.13% higher

Exxon Mobil Corp has also seen a steady increase after a difficult year

Exxon Mobil Corp has also seen a steady increase after a difficult year

The FDA's full approval of the Pfizer vaccine is expected to encourage 30% of Americans to get vaccinated against COVID-19

The FDA's full approval of the Pfizer vaccine is expected to encourage 30% of Americans to get vaccinated against COVID-19

Fed Chair Jerome Powell is due to meet with other world bank leaders when the Jackson Hole Symposium convenes on Thursday, and his remarks will be closely parsed for any clues regarding the Fed's tapering of asset purchases and hiking key interest rates.

The event will take place virtually and not in person due to the spread of COVID-19 in the county, which has reduced expectations that any major announcement will be made at the event.

'The fact that the Fed is having a virtual (Jackson Hole) meeting tells you that they might be thinking maybe they need to keep supporting the economy,' Detrick noted.

The Dow Jones Industrial Average also saw a healthy increase as it rose 30.55 points, or 0.09%, to 35,366.26. 

The session marked the S&P 500's 50th record high close so far this year. 


Tech and tech-adjacent megacaps - firms whose stock prices sits well above the market average -  were once again doing the heavy lifting, but economically sensitive cyclicals and smallcaps - smaller firms valued at between $300 million and $2 billion - outperformed the broader market.

Best Buy Co Inc jumped 8.3% after the electronics retailer beat analyst earnings expectations and raised its full year sales forecast.

U.S.-listed shares of China-based e-commerce platform Pinduoduo Inc surged 22.2% after reporting its first ever quarterly profit.

CLothing firm JD.com gained 14.4% in the wake of the Chinese online retailer's remarks on Monday that it does not expect any business impact from a wave of regulations hitting the industry at home.

Other shares of Chinese companies listed on U.S. exchanges were bouncing back as well, with the Invesco Golden Dragon ETF jumping 8.0%.

Cybersecurity firm Palo Alto Networks Inc advanced 18.6% as brokerages raised their price targets following its full-year forecast beat.

Advancing issues outnumbered declining ones on the NYSE by a 2.17-to-1 ratio; on Nasdaq, a 1.82-to-1 ratio favored advancers.

The S&P 500 posted 28 new 52-week highs and one new low; the Nasdaq Composite recorded 96 new highs and 37 new lows.

Volume on U.S. exchanges was 8.97 billion shares, compared with the 9.08 billion average over the last 20 trading days.

The boost in the economy serves as a positive sign as the U.S. is still reeling from the spike in the delta variant, with more than 151,000 new cases reported this week, according to the Center for Disease Control. 

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