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U.S. Stocks Move Moderately Higher On Positive Coronavirus Vaccine Data

wallstreet aug29 01jul20 lt

Stocks have moved moderately higher in morning trading on Wednesday, adding to the substantial gains posted in the second quarter. Buying interest has remained somewhat subdued, however, limiting the upside for the major averages.

The Dow briefly dipped below the unchanged line in recent trading but is currently up 53.37 points or 0.2 percent at 25,866.25. The Nasdaq is up 58.29 points or 0.6 percent at 10,117.06 and the S&P 500 is up 15.04 points or 0.5 percent at 3,115.33.

The strength on Wall Street comes after drug giant Pfizer (PFE) and German biotech company BioNTech (BNTX) announced positive data from an early-stage human trial of a potential coronavirus vaccine.

Pfizer and BioNTech said the most advanced of four investigational vaccine candidates was generally well tolerated and produced neutralizing antibodies.

Adding to the positive sentiment, the Institute for Supply Management released a report showing U.S. manufacturing activity unexpectedly expanded in the month of June.

The ISM said its purchasing managers index jumped to 52.6 in June from 43.1 in May, with a reading above 50 indicating an expansion in manufacturing activity.

Economists had expected the index to climb to 49.5, which have still indicated a modest contraction in manufacturing activity.

"As predicted, the growth cycle has returned after three straight months of COVID-19 disruptions," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.

He added, "Demand, consumption and inputs are reaching parity and are positioned for a demand-driven expansion cycle as we enter the second half of the year."

A separate report released by payroll processor ADP showed a significant increase in private sector employment in the month of June as well as a substantial upward revision to the data for May.

ADP said private sector employment jumped by 2.369 million jobs in June, which was below economist estimates for a spike of about 3.000 million jobs.

However, revised data showed private sector employment soared by 3.065 million jobs in May compared to the previously reported loss of 2.760 million jobs.

Airline stocks are turning in some of the market's best performances in morning trading, with the NYSE Arca Airline Index surging up by 1.7 percent.

Within the sector, United Airlines (UAL) is posting a strong gain after announcing it is adding nearly 25,000 flights to its August schedule.

Considerable strength has also emerged among utilities stocks, as reflected by the 1.4 gain being posted by the Dow Jones Utilities Average.

On the other hand, gold stocks have shown a significant move to the downside, dragging the NYSE Arca Gold Bugs Index down by 2 percent. The index ended the previous session at its best closing level in over a month.

The pullback by gold stocks comes as the price of gold for August delivery is plunging $26.10 to $1,774.40 an ounce after reaching a nearly nine-year high on Tuesday.

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.8 percent, while China's Shanghai Composite Index jumped by 1.4 percent.

The major European markets have also turned mixed on the day. While the German DAX Index is down by 0.2 percent, the French CAC 40 Index is up by 0.1 percent and the U.K.'s FTSE 100 Index is up by 0.2 percent.

In the bond market, treasuries are seeing further downside after moving modestly lower over the course of the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.9 basis points at 0.692 percent.

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