The S&P 500 declined 0.9% to 3,155, and the Russell 2000 fell 1.3% to 1,403
A rapid rally to start the week, sparked by encouraging vaccine news from Pfizer and BioNTech, collapsed in the afternoon.
News about coronavirus drugs in development gave the market an early spark on Monday, but this time it wasn’t Gilead Sciences’ (GILD) remdesivir – it was Pfizer (PFE, +4.1%) and smaller BioNTech (BNTX, +10.6%). The FDA granted the two companies a Fast Track designation for a pair of COVID-19 vaccine candidates that are currently in early-phase clinical studies.
PepsiCo (PEP, +0.3%) also delivered some good news in the form of a second-quarter profit beat ahead of meatier reports on this week’s earnings calendar.
But a rip-roaring morning turned volatile as the day went on, and the rally eventually unravelled in spectacular fashion as California moved to close indoor operations of restaurants, bars and movie theatres across the state, as well as other businesses in 30 counties. Tesla (TSLA), for instance, gained as much as 16% before swinging to a 3.1% loss.
The Dow ultimately dropped 553 points from its peak to finish just 10 points higher to 26,085. The S&P 500 declined 0.9% to 3,155, and the Russell 2000 fell 1.3% to 1,403. Tech stocks lost some steam, sending the Nasdaq down 2.1% to 10,390.
Although, many analysts were expecting a volatile (albeit ultimately go-nowhere) summer but rosier results down the road.
Clearly, the market has been in a consolidation period since early June; however, we still believe in our fundamental core thesis, writes Canaccord Genuity analyst Tony Dwyer. More specifically, historic levels of credit and liquidity, coupled with the turn in the global economy, should cause any periods of consolidation to be resolved to the upside – even with weak Q2/20 EPS reports and cautious comments from management teams.
We are in unprecedented times with substantial health, economic, social, and political unknowns – so trying to predict the day-to-day volatility is impossible. But the majority of our data continues to point to intermediate- to long-term opportunity in the economic reopening theme as we move into 2021, he said.
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