S&P Hits A New Record After Pfizer Says Its COVID Vaccine Is 90% Effective

Plus, Joe Biden is the projected winner of the U.S. presidential election, airline and movie theater stocks are soaring while stay-at-home stocks are sinking, and McDonald’s delivered an earnings beat.

Stocks were higher to start Monday with the Dow gaining 1,317 point, or 4.7%, hitting a new all-time high. The S&P rose 3.5% to a new record, while the Nasdaq added 1.3%.

90% effective. Pfizer shares are up nearly 8% and BioNTech shares are up more than 10% this morning after the companies announced their coronavirus vaccine was more than 90% effective in preventing COVID-19. Eight months into the worst pandemic in a century, the preliminary results from a study with tens of thousands of volunteers pave the way for the two companies to seek an emergency-use authorization from regulators should further research also prove the vaccine is safe. “I think we can see light at the end of the tunnel,” said Pfizer Chairman and CEO, Dr. Albert Bourla. “I believe this is likely the most significant medical advance in the last 100 years, if you count the impact this will have in public health, global economy. …It is a great day for science. It is a great day for humanity when you realize your vaccine has 90% effectiveness. That’s overwhelming.”

Joe Biden was called as the projected President-elect on Saturday, with the Democrat winning at least 279 electoral college votes and likely up to 306. Sen. Kamala Harris, his running mate, will become the first woman to serve as Vice President, as well as the first person of Black and South Asian-American descent to hold the office. “I am honored and humbled by the trust the American people have placed in me and in Vice President-elect Harris,” Biden said in a statement on Saturday after his projected victory. “In the face of unprecedented obstacles, a record number of Americans voted. Proving once again, that democracy beats deep in the heart of America.” President-elect Biden is moving ahead with transition plans, including appointments to White House staff jobs and naming a 13-member task force to map out his coronavirus response, and gave a traditional victory speech Saturday night, even as President Donald Trump has yet to accept the results of the election. The Senate race remains tied at 48 seats each for Democrats and Republicans, with the results for which party will control the chamber expected in January after run-off elections take place in Georgia.

Airlines and movie theater stocks surged higher this morning following the big vaccine news from Pfizer and BioNTech. American Airlines shares are up more than 13%, Delta and Southwest shares are up more than 12%, and United Airlines is up nearly 16%. AMC Entertainment has skyrocketed more than 61% this morning, Cinemark has gained 50%, Marcus Theaters is up 25%, and IMAX is up nearly 24%. These stocks have been particularly sensitive to coronavirus news as the pandemic has prevented customers from flying and going to the movies, pressuring revenue and driving up losses. With a vaccine, COVID-19 cases are expected to decrease substantially and consumers will be more willing to fly and return to theaters. Still, a vaccine may not be widely available to the public until mid-2021, so while the news is positive, it won’t fix the near term issues facing these companies. 

Meanwhile, stay-at-home stocks slipped lower. Peloton shares are down more than 16%, Zoom Video shares have sunk 12%, Teladoc is down 8%, Shopify has fallen 7%, Netflix is down 5%, and Amazon has slipped more than 2% lower. Payment stocks PayPal and Square also sank, falling 2.4% and 2.5%, respectively. “The rotation that the market is doing any imagination with Nasdaq in negative territory and Russell 2000 in limit up,” said Alberto Tocchio, a portfolio manager at Kairos Partners. “We will continue to see some rotation out of ‘winners’ and into the laggards.” Paul Craig, portfolio manager at Quilter Investors, said, “Three are still some questions to be answered around the rollout of this vaccine, and with the U.S. political uncertainty not quite finalized yet there remains some risk still on the table. But for well-diversified investors, they will do well to stay focused on the middle 80% of companies rather than glamour investing and over the long-term are likely to benefit the greatest from the new environment.”

And McDonald’s delivered an earnings beat today, reporting adjusted earnings per share of $2.22 on revenue of $5.42 billion, compared to analysts’ expectations for earnings per share of $1.90 on revenue of $5.4 billion. McDonald’s also unveiled its new growth strategy, which includes everything from a long-awaited U.S. loyalty program to a new crispy chicken sandwich to maintain growth. The “Accelerating the Arches” strategy is expected to produce system-wide sales growth in the mid-single digits next year, the company said. “In countries around the world, we have seen customer behaviors change at an unprecedented pace over the last several months,” CEO Chris Kempczinski said in a statement announcing the plan. “This presents an opportunity to do something special as we write the next great chapter of McDonald’s.”

Stocks We’re Watching

Cloudflare (NYSE: NET): Cloudflare shares spiked 13% on Friday after reporting an earnings beat. The company said third quarter revenue rose 54% to $114.2 million, beating estimates for $103.2 million. “Our third quarter represented many significant milestones including surpassing $100M in revenue, crossing 100,000 paying customers, and releasing more than a dozen new products and features,” said Matthew Prince, co-founder & CEO of Cloudflare, in a statement. “I’m incredibly proud that we exceeded financial, customer, and innovation milestones, all while providing our services, at no cost, to state and local governments to ensure that cyberattacks don’t disrupt the United States 2020 elections. The world has never needed the Internet more than it has over the last nine months, and we’re laser focused on helping to keep it fast, reliable, and secure.”