Stocks Shoot Higher After Encouraging Vaccine Report…..

U.S. stocks surged higher, touching record intraday highs on the way, as several media reports declared that Joe Biden won the 2020 presidential election which offered some needed clarity in an uncertain political environment. However, the main driver of today’s market movement came courtesy of Pfizer and BioNTech after a report that a Phase 3 trial of their COVID-19 vaccine achieved more than 90% efficacy. The positive vaccine news boosted value and cyclical stocks which led the way, along with those tied to industries that had been severely disrupted by the pandemic. Conversely, the tech-heavy Nasdaq index closed lower as some of the secular growth and work-from-anywhere stocks lagged behind. Treasury yields rose sharply as bond prices fell, and crude oil prices surged. Gold fell and the U.S. dollar turned higher. The economic calendar was void of any major releases today, but in other equity news, Dow member McDonald’s posted stronger-than-expected Q3 earnings. Asia finished nicely higher and Europe jumped broadly higher.

The Dow Jones Industrial Average rallied 835 points (3.0%) to 29,158, the S&P 500 Index jumped 41 points (1.2%) at 3,551, and the Nasdaq Composite was down 181 points (1.5%) to 11,714. In heavy volume, 1.7 billion shares were traded on the NYSE and 5.7 billion shares changed hands on the Nasdaq. WTI crude oil surged $3.15 higher at $40.29 per barrel and wholesale gasoline added $0.08 to $1.16 per gallon. Elsewhere, the Bloomberg gold spot price dropped $85.51 to $1,865.83 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—rose 0.5% to 92.85.

Stocks that have been beaten down by the severe disruption of the pandemic, such as those tied to travel and leisure, movie theaters, and theme parks, along with some retailers and restaurants, led the charge higher. Moreover, value and cyclical stocks gained favor compared to secular growth stocks and other companies that have benefitted from the work-from-anywhere push that resulted from the pandemic.

Treasury yields rose decisively…..

Treasuries fell, as the markets react to the presidential election results and the favorable news on the COVID-19 vaccine front. The yield on the 2-year note advanced 2 basis points (bps) to 0.18%, the yield on the 10-year note rose 10 bps to 0.92%, and the yield on the 30-year bond jumped 11 bps to 1.71%.

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