Dow hits record high on Pfizer vaccine news, Biden win

Wall Street surged on Monday and the Dow Jones Industrial Average hit a record high, after Pfizer said its vaccine was 90 percent effective in protecting people against Covid-19.

U.S-based pharmaceutical giant Pfizer and German biotech firm BioNTech made the announcement Monday morning, citing data from their late-stage vaccine trial.

The Dow, which had already soared by 1,700 points in premarket trading, was a hair short of 30,000 in the minutes after the opening bell, for a gain of over 5 percent. The S&P 500 rallied to a record high, surging by 3.6 percent. The Nasdaq gained just 1.2 percent.

Shares in travel and hospitality rocketed after the Pfizer announcement, on hopes that passenger demand and visitors would return. Casino operator MGM Resorts and Delta Air Lines both surged by 18 percent and Royal Caribbean cruise lines soared by 25 percent.

High-growth tech stocks fell out of favor Monday, as the stay-at-home sector became a hot potato in the face of a “return to normal.” The tech sector has hugely benefited through coronavirus-induced lockdowns, with stocks such as Amazon surging by close to 100 percent since the beginning of the pandemic and Netflix’s market capitalization growing by around $100 billion.

The rally built on post-election gains which came as former Vice President Joe Biden emerged on Saturday as victor in the presidential race, according to NBC News Decision Desk projections.

“This is a game changer,” Albert Bourla, Pfizer’s chairman and chief executive, told CNBC in an interview Monday morning. “Today is a great day for science and humanity,” he wrote in an official statement.

With Election Day stretching for five days with no outcome, Americans — and markets — had been anxiously awaiting to find out whether President Donald Trump or Biden would be victorious. Biden became president-elect Saturday after winning the pivotal state of Pennsylvania. NBC News called the race in Pennsylvania for Biden at 11:24 a.m. ET, bringing Biden’s Electoral College vote total to 273 and allowing the network to call the election for him.

For his part, Trump has refused to concede, vowing Saturday to press forward with a legal fight, pushing unfounded claims of voter fraud in response to the news that President-elect Joe Biden had won the election.

Investors have already begun to reposition their portfolios to reflect a potential new reality of a divided government, with no “blue wave” that would have seen Democrats in control of both chambers of Congress.

With legislative power likely to be more balanced, traders wagered that restrictive measures such as tighter regulation and higher taxes would be unlikely to pass.

Markets rallied last week, buoyed Friday by a better-than-expected jobs report that showed gains of 638,000 positions, higher than the 530,000 that economists had predicted. Still, the employment snapshot is a monthly reminder that the labor market has far to go before recovering all 22 million jobs lost since the coronavirus pandemic hit, and indicates how crucial support measures such as fiscal stimulus remain.