NEW YORK — The Dow Jones Industrial Average returned to a record Monday for the first time since plunging nine months ago in despair about the pandemic, riding a swell of optimism that a vaccine may soon control the coronavirus and the economic destruction it has caused.
Moderna said early in the morning that its COVID-19 vaccine appears to be 94.5% effective, according to preliminary data. It’s the second time this month that a company unveiled such encouraging numbers about a vaccine, boosting hopes that the global economy can return to some semblance of normal next year.
Leading the way again were stocks of companies that would benefit most from an economy busting out of its forced hibernation, such as airlines, movie theaters and banks. At the same time, pandemic-winning stocks that benefited from lockdown orders such as Amazon and Zoom Video Communications lagged as they no longer looked like the only safe bets to play.
The Dow jumped 470.63 points, or 1.6%, to 29,950.44. It surpassed its prior closing record of 29,551.42, set in February before pandemic panic hit the market.
The S&P 500, which matters more to the performance of most 401(k) accounts, added to its own record set Friday. It rose 41.76, or 1.2%, to 3,626.91. The Nasdaq composite gained 94.84, or 0.8%, to 11,924.13. It lagged the rest of the market amid lessened interest for tech stocks.
Treasury yields, oil prices and stocks around the world also rallied on the shot of increased optimism. A vaccine is precisely what markets have been waiting for to pull the global economy out of its cavern, and analysts say it’s a game changer.
Of course, for all its euphoria, many risks remain for the market. It’s still not guaranteed when a vaccine could be widely available, let alone whether one ultimately will. The pandemic is continuing to worsen, meanwhile, with rising coronavirus counts across the United States and Europe pushing governments to bring back varying degrees of restrictions on businesses. Some areas of the economy have been slowing, particularly after big financial-support programs from Congress expired.
“The vaccine could help people breathe a sigh of relief, but the devil is in the details,” said Gene Goldman, chief investment officer at Cetera Financial Group, referring to the need for more complete data and eventual distribution plans.
But investors for now are focusing on the possibility of a world next year where customers are again going outside to work at offices, buying things at enclosed stores and heading on vacations.
It was just a week ago that Pfizer and BioNTech sent optimism soaring with their encouraging vaccine data results. Movie theater chain Cinemark has surged 58.3% since just before the announcement. Stocks of smaller companies, whose prices tend to sway more with the strength of the economy, are up more than double their larger rivals over the same time: an 8.6% jump for the Russell 2000 index of small-cap stocks versus 3.3% for the S&P 500.
Stocks of companies that had thrived amid lockdowns and vigilance about the virus, meanwhile, have lagged. Amazon, Netflix and Etsy are all down more than 5% since just before Pfizer’s announcement. Zoom has sunk 20.2%.
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