Pfizer Shares Drive Dow Industrials Higher
July 22 2020 - 4:32PM
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 closed about 165 points, or 0.6%, higher.
The S&P 500 also added 0.6%, while the Nasdaq Composite edged
up 0.2%.
Pfizer shares rose 5.1%, leading the Dow. Under the $1.95
billion agreement, the U.S. will receive 100 million doses of the
vaccine, after it is cleared by regulators, and can 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% after the company reported slowing
revenue growth for the second quarter. Shares in Spotify Technology
rose 4.6% 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.
"In general, the low bar, or at least the lower expectations
going into Q2 -- actual earnings reports have been beating that
hurdle, so perhaps that's been also adding to the momentum or the
optimism that we're seeing in the markets," said Amy Kong, chief
investment officer at Barrett Asset Management.
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%.
Among investors' 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.
"We are cautiously optimistic that they will reach a decision
and will send money prudently but appropriately to allow the
economy to continue to recover back toward some semblance of
normalcy," said Nancy Prial, co-CEO and senior portfolio manager at
Essex Investment Management.
The yield on the benchmark 10-year Treasury note slipped to
0.595% -- its lowest close since April 24 -- from 0.606% Tuesday,
according to Tradeweb. Yields fall as bond prices rise.
--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 16:17 ET (20:17 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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