The market finished higher on Wednesday—with the S&P closing in on a new record high—after President Trump announced that the U.S. government will purchase 100 million doses of Moderna’s experimental coronavirus vaccine.
The Dow Jones Industrial Average was up 1.1%, around 300 points, on Wednesday, while the S&P 500 rose 1.4% and the tech-heavy Nasdaq Composite gained 2.1%.
The S&P neared a new record close, finishing the day just below its previous high (set back in February) of 3,386.15.
Sentiment was lifted after President Trump announced late on Tuesday that the federal government will purchase 100 million doses of Moderna’s experimental coronavirus vaccine, which is currently in Phase 3 late-stage human trials.
The deal, worth $1.5 billion, follows similar agreements the government has made with other drug makers for potential coronavirus treatments, such as Pfizer and Johnson & Johnson.
Tech stocks also rebounded strongly on Wednesday, after dragging the market lower in the previous session: Shares of Facebook, Amazon, Netflix and Google-parent Alphabet rose around 2%, while Microsoft and Apple both gained 3%.
Shares of Tesla, meanwhile, jumped nearly 13% after the company’s five-for-one stock split that was announced on Tuesday.
“While markets think a fiscal deal will eventually be reached, this isn’t a critical, make-or-break catalyst for stocks (at least in the near-term),” says Vital Knowledge founder Adam Crisafulli. Solid economic data, strong earnings, and anticipation for the Federal Reserve’s meeting next month are all helping the S&P 500 “to absorb Washington’s acrimony.”
Former Vice President Joe Biden announced late on Tuesday that he is tapping former Democratic primary opponent Sen. Kamala Harris (D-Calif.) as his vice presidential nominee, ending months of speculation surrounding the first ever female-exclusive VP selection process. Biden’s selection of Harris “wasn’t particularly surprising to the market as she was already considered one of the leading contenders,” Bespoke Investment Group said in a recent note.
What to watch for
Ongoing coronavirus stimulus talks, which ended in a stalemate last week. President Trump last Saturday issued several executive orders to extend economic relief programs, such as expanding federal unemployment benefits—at a reduced rate of $400 per week, deferring student loan payments through 2020, extending a federal moratorium on evictions and providing a payroll tax holiday. But Trump’s executive action was met with criticism from both parties and is likely to face legal challenges, since continuing the programs would require federal funding from Congress. Treasury Secretary Steven Mnuchin said on Monday that the White House is open to resuming coronavirus relief talks with Democrats and is willing to provide more relief money in order to make a compromise.
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