A Shot in the Arm

By Alex Eule |  Monday, May 18

Double Dose. Stocks had their best day in more than a month after investors got positive news on the two topics that matter most these days: monetary policy and a return to normalcy. 

On the monetary front, Federal Reserve Chairman Jerome Powell said the Fed still has plenty of firepower to fight a prolonged downturn. Here's what he told CBS in an interview that aired on 60 Minutes last night: 

Well, there's a lot more we can do. We've done what we can as we go. But I will say that we're not out of ammunition by a long shot. No, there's really no limit to what we can do with these lending programs that we have. So there's a lot more we can do to support the economy, and we're committed to doing everything we can as long as we need to.

Those comments would have been enough for a nice rally, but it got better from there. Early today, biotech firm Moderna reported promising results from the first human trial of its Covid-19 vaccine. The most substantial data so far came from eight test subjects all of whom got "neutralizing antibodies" from the vaccine. Josh Nathan-Kazis spoke to Moderna's CEO shortly after the announcement: 

“We are really thrilled,” Moderna CEO Stéphane Bancel told Barron’s early Monday morning. “We lost another 800 Americans in the last 24 hours, 89,000 deaths so far. We believe this is coming back in the fall. We are already racing the clock, so we are super happy.”

A working vaccine would mean the end of our Covid-19 nightmare, so Wall Street's excitement is understandable. Much of the hope is embodied in Moderna's stock, which rose 20% today and has soared 309% in 2020.

Barron's presciently featured "Vaccine" bolded across the cover this weekend -- read our story here about the drug industry's varying approaches to vaccine development. And check out Josh's cover story about Moderna from last year. It's especially worth reading today.

The Dow Jones Industrial Average finished Monday up 912 points, or 3.9%, while the S&P 500 rose 3.2%. For those keeping track, the S&P 500 is now up 32% from its March 23 low and 13% below its February all-time high.

Even the mere prospect of a vaccine had investors unwinding the lockdown stocks they've rushed toward in recent months. The worst performer in the S&P 500 today was Campbell Soup, which fell 4.8%. Stay-at-home stocks fell hard, as well: Peloton Interactive was down 9.9%, Slack Communications fell 7.4%, and Zoom Video Communications was off 5.8%. 

The biggest gainers, no surprise, came from the hard-hit travel industry. United Airlines Holdings jumped 21%, Expedia Group rallied 19%, and Norwegian Cruise Line was up 18%.