Pfizer Shares Drive Dow Higher
July 22 2020 - 2:11PM
Dow Jones News
By Joe Wallace and Karen Langley
A climb in shares of Pfizer boosted the Dow Jones Industrial
Average Wednesday after the US. government agreed to pay the
drugmaker and partner BioNTech to secure doses of their
experimental Covid-19 vaccine.
The blue-chip index gained 0.3%, or about 68 points. The S&P
500 added 0.3%, while the Nasdaq Composite edged down 0.1%.
Pfizer rose 4.2%. Under the $1.95 billion agreement, the U.S.
will receive 100 million doses of the vaccine, if it is cleared by
regulators, and could also acquire another 500 million doses. The
vaccine is set to enter late-stage testing this month.
Investors have welcomed any signs of progress toward a vaccine
that could allow economic activity to resume without a subsequent
rise in infections. Drugmakers stand poised to benefit: The U.S.
also has vaccine deals with other companies including
AstraZeneca.
"The experts were telling us, back in February, March and April,
it's going to be five years before we see a vaccine, and here we
are with some possible good news on vaccine that's going to hit
this year," said Phil Orlando, chief equity market strategist at
Federated Hermes. "I think the market is taking that very
favorably."
Corporate earnings remained a key focus for investors Wednesday,
with some of the technology companies that have driven much of the
stock market's recovery since March due to report quarterly
results. Investors will get fresh cues about the outlook for the
sector when Microsoft, whose shares have risen 34% in 2020, reports
results for its fourth quarter after the close of trading.
"For Microsoft, expectations are probably quite high," said Hani
Redha, a portfolio manager at PineBridge Investments. "There will
be some sense of how well cloud [computing] in particular has
fared."
Tesla is also due to release earnings Wednesday. The
electric-vehicle maker's shares have soared in recent months, in
part on increased expectations that it will report a fourth
straight quarterly profit. That could qualify Tesla for inclusion
in the S&P 500.
Shares in Snap dropped 6.4% after the company reported slowing
revenue growth for the second quarter. Shares in Spotify Technology
rose 5.9% after The Wall Street Journal reported that the streaming
company had reached a new licensing agreement with Vivendi's
Universal Music Group.
HCA Healthcare's shares gained 11% after the company reported
higher profit in the second quarter.
Wednesday's moves came after China's Foreign Ministry said the
U.S. had instructed China to close its consulate in Houston. That
raised the specter of an escalation in tensions between the world's
two largest economies and prompted Beijing to condemn the move as
outrageous and unprecedented.
The rising tension weighed on markets overseas. The regional
Stoxx Europe 600 index fell 0.9%. Hong Kong's flagship Hang Seng
Index dropped 2.3%.
"On the face of it, like the scale of the virus, this is a very
serious development," said Richard McGuire, head of rates strategy
at Rabobank. "Sentiment has been knocked, but only modestly, given
this further escalation of tensions between two of the world's
superpowers."
President Trump this month dimmed hopes of a phase-two trade
deal with China, saying the relationship between the two countries
had been too badly damaged by the pandemic.
Among investors' other concerns: Senate Majority Leader Mitch
McConnell said Tuesday that Congress is unlikely to pass a new
fiscal stimulus bill quickly. The White House and Senate
Republicans are struggling to bridge divisions on a payroll-tax
cut, school funding and other issues.
In a sign of investors' continued caution, the yield on 10-year
Treasury notes slipped to 0.589%, according to Tradeweb, from
0.606% Tuesday. The drop in yields suggests fund managers expect
tepid inflation and weak growth.
"The bond market is much more pessimistic than the equity
market, and I think the equity market is right," said Patrik Lang,
head of equity research at Swiss private bank Julius Baer. China's
quick economic recovery shows U.S. growth could also pick up
quickly once coronavirus is under control, according to Mr.
Lang.
--Xie Yu contributed to this article.
Write to Joe Wallace at Joe.Wallace@wsj.com and Karen Langley at
karen.langley@wsj.com
(END) Dow Jones Newswires
July 22, 2020 13:56 ET (17:56 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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