On Monday, actions by airlines, hotels and cruise ships rose sharply as the encouraging results of Moderna vaccine tests triggered new optimism about ending the Coronavirus pandemic.
The biotechnology company announced Monday morning that its experimental coronavirus vaccine was 94.5 per cent effective in preventing COVID-19 as a result of preliminary analysis. The update was made a week after Pfizer and BioNTech found similar positive results from their own early vaccine trials. Although both candidates still need to be approved by the US FDA, their anticipated effectiveness suggests that national implementation of the vaccine could take place in 2021.
The news has increased the shares of companies that have been most affected by the virus and restrictions on home stay. United Airlines has fallen by 8.6%. American Airlines and Delta jumped by about 6% shortly after the news about the vaccine.
Royal Caribbean Cruises soared by 8% to intraday highs. Carnival and Norwegian Cruise Line Holdings rose by 10%.
Hotels also picked up on the news. Hyatt Hotels and Marriott International added 5.9% and 4.6%, respectively. Hilton Hotels are trading 3.7% higher.
The movements simulate the dislocations observed after previous encouraging vaccine updates. The stocks that will benefit the most from a full economic recovery will jump upwards, unlike those that did well during the pandemic. Monday was no exception as household stocks such as Zoom, Netflix and Peloton were traded down.
Both Moderna and Pfizer intend to apply for an emergency use permit later this month. The permit will allow companies to quickly start distributing their vaccines to the most vulnerable groups. Even if both applicants are approved by the regulatory authorities, vaccine shipments will be very limited.
However, new hopes for a short-term breakthrough have lifted the stock market as a whole. The Dow Jones Industrial Index opened 375 points higher and closed at record high levels. Composite Nasdaq levelled early profits compared to competitors' indices as major technology companies fell.
Oil futures increased profits as traders were hoping for a vaccine that would revive consumption through travel. The value of West Texas Intermediate oil contracts increased by 4.9% to 42.09 dollars per barrel.