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S&P 500, Nasdaq start December at peak on COVID-19 vaccine optimism

Investors overlooked data showing U.S. manufacturing activity slowed in November amid a rise in COVID-19 infections that has prompted state-wise restrictions, with California considering new "stay-at-home" orders.

December 01, 2020 / 10:11 PM IST

The S&P 500 and the Nasdaq hit record highs on Tuesday as hopes that a COVID-19 vaccine will be available soon and better-than-expected factory data from China bolstered bets of a speedy economic recovery.

Investors are closely following updates on a handful of leading vaccine candidates as well as the start of global shipments as drugmakers submit paperwork for regulatory approvals.

Pfizer Inc gained about 5% as the drugmaker and Germany's BioNTech SE sought emergency approval of their vaccine candidate from the European regulator.

Wockhardt says in talks with vaccine developers for manufacturing deals of COVID-19 shots

The partners are now neck-and-neck with rival Moderna, which jumped 11% after announcing it would ask the regulator to recommend conditional approval for its shot.


COVID-19 Vaccine

Frequently Asked Questions

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How does a vaccine work?

A vaccine works by mimicking a natural infection. A vaccine not only induces immune response to protect people from any future COVID-19 infection, but also helps quickly build herd immunity to put an end to the pandemic. Herd immunity occurs when a sufficient percentage of a population becomes immune to a disease, making the spread of disease from person to person unlikely. The good news is that SARS-CoV-2 virus has been fairly stable, which increases the viability of a vaccine.

How many types of vaccines are there?

There are broadly four types of vaccine — one, a vaccine based on the whole virus (this could be either inactivated, or an attenuated [weakened] virus vaccine); two, a non-replicating viral vector vaccine that uses a benign virus as vector that carries the antigen of SARS-CoV; three, nucleic-acid vaccines that have genetic material like DNA and RNA of antigens like spike protein given to a person, helping human cells decode genetic material and produce the vaccine; and four, protein subunit vaccine wherein the recombinant proteins of SARS-COV-2 along with an adjuvant (booster) is given as a vaccine.

What does it take to develop a vaccine of this kind?

Vaccine development is a long, complex process. Unlike drugs that are given to people with a diseased, vaccines are given to healthy people and also vulnerable sections such as children, pregnant women and the elderly. So rigorous tests are compulsory. History says that the fastest time it took to develop a vaccine is five years, but it usually takes double or sometimes triple that time.

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"The optimism continues to build for a vaccine to come out and be very successful… There is this expectation that you're going to see a global synchronized recovery next year," said Larry Adam, chief investment officer at Raymond James.

Investors overlooked data showing U.S. manufacturing activity slowed in November amid a rise in COVID-19 infections that has prompted state-wise restrictions, with California considering new "stay-at-home" orders.

All major S&P sectors rose with economically-sensitive energy and financials leading gains.

The Dow wrapped up its best month in more than three decades on Monday as breakthroughs in vaccine spurred a shift toward sectors hardest-hit by virus induced shutdowns.

At 10:08 a.m. ET, the Dow Jones Industrial Average rose 409.86 points or 1.38% to 30,048.50, the S&P 500 gained 49.33 points, or 1.36% to 3,670.96 and the Nasdaq Composite gained 136.25 points or 1.12% to 12,334.61.

Earlier in the day, China's better-than-expected factory data lifted global equities. Several other countries also reported sharp upticks in factory activity.

Investors will focus on remarks from Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell at a congressional hearing, which is likely to highlight divisions over what more should be done in response to the pandemic.

Among other stocks, Zoom Video Communications Inc tumbled 12% after the company warned its gross margins would remain under pressure going into 2021.

Tesla Inc rose about 3% after S&P Dow Jones Indices said it would add one of Wall Street's most valuable companies to the S&P 500 index all at once on Dec. 21.

Micron Technology advanced 5% as the chipmaker increased its revenue, gross margin and earnings per share guidance for the first quarter of 2021.

Advancing issues outnumbered decliners by a 5-to-1 ratio on the NYSE and by a 2.3-to-1 ratio on the Nasdaq.

The S&P 500 posted 31 new 52-week highs and no new low, while the Nasdaq recorded 212 new highs and seven new lows.

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