By Geoffrey Smith
Investing.com — U.S. stock markets surged at opening on Tuesday as the official arrival of summer in the shape of the Memorial Day weekend appeared to have awakened the optimist in everyone on Wall Street.
Rising hopes that the pharma sector will produce a vaccine against the Coronavirus before the year-end, coupled with the sight of pent-up demand being unleashed at beaches and parks across the country over the weekend, pushed major indices to their highest in over two months.
By 10 AM ET (1000 GMT), the Dow Jones Industrial Average was up 591 points, or 2.4%,at 25,050 points, its highest since early March, while the S&P 500 was up 2.1%, breaking through the 3,000 barrier, and the Nasdaq Composite was up 1.4%.
Sentiment was supported by the latest news from the hunt for a vaccine to treat the Coronavirus, something that is widely seen as a necessary precondition for consumers to return to pre-pandemic levels of activity with confidence.
On Friday, the nation’s top doctor Anthony Fauci had told NPR that his timeline for having a virus ready to distribute within 12 months of the outbreak’s beginning was still intact.
Novavax (NASDAQ:NVAX) stock rose 12.5% to a new record high after announcing the start of human testing of its experimental vaccine in Australia. In contract to the drugs being developed by the likes of Moderna (NASDAQ:MRNA), Novavax’s is based on technology that has already been proven in other antiviral drugs. Novavax has tripled in the last three weeks as its testing process has moved forward.
In addition, Merck & Company (NYSE:MRK) stock rose 0.8% after it announced two ventures to advance its own search for a Covid-19 vaccine. The company is buying Austrian-based Themis Bioscience, and will also work together with the IAVI research institute, whose experimental vaccine uses the same technology that is the basis for Merck’s Ebola virus vaccine. Merck’s gains are an implicit admission that its in-house development team was too far away from a breakthrough.
Analysts are looking with increasing favor on beaten-down cyclicals, amid signs of a rebound in May business surveys.
“If forward-looking data continues to improve, then cyclical stocks might finally begin to outpace defensives, following a highly unusual two-month rally in which defensive stocks were usually the leaders,” said Jeffrey Kleintop, chief global investment strategist with Charles Schwab (NYSE:SCHW), said in a weekly video briefing.
Delta Air Lines (NYSE:DAL) stock was one of a handful of airline stocks outperforming in early trade, rising 9.6% despite the collapse of its Latin American partner LATAM into bankruptcy over the weekend. The news theoretically present Delta with the chance to strengthen its long-term position in the regional market at a knock-down cost. The $1.9 billion it spent on a 20% stake last year is, however, now probably worthless.
Elsewhere, evidence of resilient consumer demand over the holiday weekend pushed crude oil prices higher. By 10 AM, U.S. crude futures were at $34.03 a barrel, up 2.4%.
Stocks – Wall Street Roars Higher at Open on Virus Hopes
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