US open: Stocks surge as Novavax begins first Covid-19 vaccine trial on humans
By Iain Gilbert
Date: Tuesday 26 May 2020
(Sharecast News) - US stocks recorded solid gains following the bell on Tuesday as investors returned from the long Memorial Day weekend to news that pharmaceuticals firm Novavax had begun trials on a Covid-19 vaccine in Australia.
As of 1530 BST, the Dow Jones Industrial Average was up 2.48% at 25,072.02, while the S&P 500 was 1.97% firmer at 3,013.71 and the Nasdaq Composite came out the gate 1.47% stronger at 9,461.52.
The Dow opened 606.86 points higher on Monday - marking a change in direction from the previous session, which ended in the red as a ratcheting up of tensions between Washington and Beijing offset optimism surrounding a potential Covid-19 vaccine from biotech group Moderna Therapeutics.
While Moderna may have been the darling of the previous week, Maryland-based firm Novavax was making all the headlines on Tuesday after announcing it had started the first human study of its experimental coronavirus vaccine and that results from the trial were expected in July.
Also in focus were heightened tensions between Washington and Beijing, which seemingly escalated over the weekend when White House National Security Advisor Robert O'Brien stated the US will most likely slap sanctions on China if it chooses to go ahead with new national security laws that would grant it greater control over autonomous Hong Kong.
China's foreign minister Wang Yi denounced a move by the US government to expand an entity list of Chinese companies restricted from doing business with American firms due to alleged human rights abuses in the Xinjian Uighur Autonomous region. Yi claimed that political forces in Washington were pushing the two nation's toward a "new Cold War".
However, Donald Trump tried to direct attention elsewhere on Tuesday, tweeting about the early rally and saying: "Stock Market up BIG, DOW crosses 25,000. S&P 500 over 3,000. States should open up ASAP. The Transition to Greatness has started, ahead of schedule. There will be ups and downs, but next year will be one of the best ever!"
Investors were also keeping a keen eye on economic activity in US states that had begun reopening following the coronavirus-related lockdowns, with the Chicago Fed's national activity index registering a reading of -16.74 in April, down from a revised negative 4.97 in March, while the Dallas Fed's manufacturing index will be published shortly.
Elsewhere on the macro front, the S&P/Case-Shiller home price index revealed that home prices were still picking up in March, despite the country shutting down as a result of the Covid-19 pandemic. On a national level, prices rose 4.4% year-on-year in March, up from 4.2% in February.
Still on data, the Conference Board's consumer confidence index nudged up to a reading of 86.6 in Month, slightly ahead of April's downwardly revised figure of 85.7, suggesting the worst of the coronavirus-fuelled economic slump may be over.
Lastly, the Commerce Department revealed that new home sales had increased by 0.6% month-on-month in April to hit 623,000 units. However, the improved figure still kept the majority of March's 13.7% slump intact.
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