US stocks surged on Monday, with the S&P 500 hitting a 10-week high, as encouraging early data from a potential coronavirus vaccine trial boosted sentiment, with investors also hoping for stimulus to cushion the economic blow from the pandemic.
Drugmaker Moderna Inc said its experimental COVID-19 vaccine showed promising results in a small early-stage trial, boosting futures in premarket trading. Its own shares jumped 24.7%.
After surging about 34% from a multi-year low hit in March, the S&P 500 has traded in a tight range this month as investors weighed hopes of an economic recovery and fears of another wave of infection as states lifted virus-led restrictions.
"If there really is a workable vaccine that can be mass produced, it really is a game changer for so many industries about which we weren't so sure if the reopenings would solve their problems," said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.
Battered travel-related stocks such as cruise line operators Carnival Corp, Royal Caribbean Cruises Ltd and Norwegian Cruise Line Holdings Ltd jumped 16% to 18.4%.
The airlines subindex added 12.8% as Delta Air Lines said it would resume flying several major routes in June.
Markets also took heart from Federal Reserve Chair Jerome Powell's remarks over the weekend on a gradual economic recovery and his affirmation that more monetary stimulus was on the way if required.
He stressed on the importance of a vaccine in establishing economic normalcy as well. Investors now await his address before the Senate Banking Committee on Tuesday to discuss how economic rescue efforts are working.
"True recovery would come above 3,000 points (on the S&P 500), and that's going to be several factors coming together, in sense of the economy opening back up again, knowing that Powell is waiting to help at any moment, and we have the vaccine," said Andre Bakhos managing director at New Vines Capital LLC in Bernardsville, New Jersey.
At 13:01 p.m. ET, the Dow Jones Industrial Average was up 838.57 points, or 3.54%, at 24,523.99, the S&P 500 was up 87.99 points, or 3.07%, at 2,951.69. The Nasdaq Composite was up 212.15 points, or 2.35%, at 9,226.71.
The benchmark S&P 500 was on track for its biggest one-day percentage gain in five weeks, with all the 11 major S&P sector indexes trading higher.
Cyclical plays were in favor with energy and materials sectors climbing 7.1% and 4.6%, respectively, as a gradual recovery in economic activity pointed to more demand for oil and industrial materials. [O/R]
General Motors Co rose 9.9% and Ford Motor Co 7.6% as they prepared to reopen their North American factories in a push to restart work in an industry that accounts for about 6% of U.S. economic activity.
Advancing issues outnumbered decliners by a 8.38-to-1 ratio on the NYSE and by a 4.58-to-1 ratio on the Nasdaq.
The S&P index recorded 22 new 52-week highs and no new lows, while the Nasdaq recorded 84 new highs and six new lows.
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