E New Vaccines Prove That Majority Of Market Movements Is Due To Speculation

Pfizer Inc. (PFE) on Monday said its experimental vaccine has shown the efficacy of more than 90% in preventing COVID-19, according to data. Such news has had a positive impact on the market movement and stock prices rose notably.

Trading on November 9, U.S. stock markets finished in different directions. The index of the S'P 500 rose by 1.17%, to 3551 points, the Dow Jones rose by 2.95%, while the Nasdaq fell by 1.53%. The unexpected publication of Pfizer and BioNTech (BNTX) vaccine performance data has fueled investor appetite for risk and caused a significant flow of capital to the financial and energy sectors most affected by the pandemic. Against the background of this flow, the IT sector lost 0.73%, while the energy sector soared by 14.2%.

Coronavirus on black background

Image Source: Unsplash

Shares of the FAANG group were the most vulnerable, with losses for the day hovering around the range of 2-8%. The effectiveness of the Biogen's Alzheimer's disease (BIIB: -28.2%) drug, according to the FDA, has not received enough evidence. McDonald's (MCD: -1,5%) presented strong quarterly results thanks to new products on the menu. Comparable U.S. sales rose 4.6 percent.

The world's stock markets show mixed dynamics. Almost immediately after the U.S. election, the focus of bidders shifted to progress in coronavirus vaccine trials. Preliminary data from the third phase of Pfizer and BioNTech vaccine studies showed that protection against the virus is achieved in 90% of cases 28 days after the start of vaccination, which is carried out in two stages. This is a high enough level of efficiency for FDA approval. The vaccine is expected to be used by the end of this year.

It should be noted that while the result is indeed successful, uncertainty about the effectiveness of the vaccine for the elderly and the duration of the production of immunity to coronavirus remains. In addition, the Pfizer vaccine should be stored at minus 70 degrees C. This may cause problems with its transportation, which can delay mass vaccination. These factors limit the excessive optimism of investors.

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William K. 1 month ago Member's comment

Was there ever any doubt that a large portion of the stock market activity is speculation? Of course some speculation that is built upon insight and data is reasonable, but that based on rumors or emotions is always suspect.