Stocks traded mostly along the flatline on Monday traders weighed the prospects of a potential coronavirus vaccine and more U.S. fiscal stimulus.
The Dow Jones Industrial Average dipped 31 points, or 0.1%. The S&P 500 was up marginally. The Nasdaq Composite outperformed, rising 0.3% as Amazon shares gained more than 1%.
Dow member Pfizer and BioNTech reported early positive data on a joint coronavirus vaccine candidate, saying the drug “elicited high, dose level-dependent SARS-CoV-2-neutralizing titers and RBD-binding IgG concentrations after the second dose.” Pfizer shares rose more than 2% on the news while BioNTech traded 10.8% higher.
Pfizer and BioNTech’s announcement came after British pharmaceutical company Synairgen claimed that its new respiratory coronavirus treatment has reduced the number of hospitalized Covid-19 patients needing intensive care in a clinical trial. Its shares rose more than 350% on the European market.
Coronavirus cases have been rising at an alarming rate and now total more than 3.7 million in the U.S., according to Johns Hopkins University.
Stimulus in focus
Traders also turned their eyes to Washington as lawmakers begin negotiations on new stimulus measures.
Earlier this year, President Donald Trump signed a stimulus package worth roughly $2 trillion which expanded unemployment benefits for those laid off during the pandemic. Among these expanded benefits, a $600-a-week check was included. However, these extra payments are set to expire later this month.
“There is a lot of uncertainty about the size and shape of the next bill, particularly on the consumer side,” said Aneta Markowska, chief financial economist at Jefferies, in a note.
“We believe consensus expects a roughly $1-$1.5 package, so if the draft comes in on the high-end of that range, it would be seen as a positive surprise,” Markowska added. “In light of the deteriorating growth momentum, it is highly unlikely that Republicans under-deliver, which means that risks are skewed to the high side.”
Wall Street was coming off of a solid weekly performance. Last week, the S&P 500 and Dow rose 1.3% and 2.3%, respectively, for their third straight weekly advances. Those gains came as investors flocked into more beaten-up value names, which pushed the iShares Edge MSCI USA Value Factor ETF (VLUE) higher by 3.5% last week.
But those advances came at the expense of major tech stocks such as Facebook, Amazon, Netflix, Alphabet and Microsoft. All four stocks closed lower last week.
Those declines led to the Nasdaq Composite’s first weekly loss in three weeks. These stocks have been the stalwarts on Wall Street this year as investors bet these companies’ business models can keep them growing during the pandemic.
“All the talk about a rotation out of technology and into more ‘value’ oriented areas, will grow in the coming weeks,” said Douglas Busch, founder of ChartSmarter, in a note. “if we lose technologies leadership in a meaningful way, I think it will adversely affect the overall market.”
“If the sector can just take a rest, and keep in the middle of the pack akin to a smart jockey that has a lot of horse under him in a thoroughbred race, then it will likely see a surge again into the fall,” he added.
In other news, Chevron shares dropped 0.8% on news that the energy giant had confirmed its agreement to buy Noble Energy. The all-stock transaction is valued at $5 billion, or $10.38 a share. Noble shares jumped 8.8%.
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