The S&P 500 closed up 1.2%, its highest level since mid-March, as investors hold out for a V-shaped recovery thanks to the huge sums of stimulus money being fired into the global economy, and as vaccine expectations grow.

Stanley Erck, the CEO of vaccine firm Novavax (NVAX) which announced its own clinical trials of a Covid-19 vaccine this week, said that workers on the front line of the pandemic could be vaccinated later this year.

However, it is not all plain sailing. Merck (MRK) CEO Kenneth Frazier warned that the 12 to 18-month timeframes many investors are pinning hopes on are “very aggressive”. In an interview with the Financial Times, the pharma giant chief said that such a schedule was not something he would hold his firm to and said that vaccines should be tested in large clinical trials that could take years to complete.

The Trump administration has funded a program called Operation Warp Speed to hasten vaccine development, but Frazier questioned whether the timelines being pushed for would result in a “safe and effective vaccine”.

Google (GOOGL) also made headlines yesterday, after announcing that it plans to reopen some of its offices in July, beginning with 10% capacity and growing to 30% by September. The move stands in contrast to other internet giants Twitter and Facebook, which have both made it clear they plan to shift to mainly remote workforces permanently. 

Big day for travel stocks help drive markets higher

The three major US stock indices were mixed yesterday, with the Dow Jones Industrial Average climbing 2.2% while the Nasdaq Composite only gained 0.2%. The disparate performance was driven by heavy gains in the financials and industrial sectors, while the information technology sector — which makes up a substantial portion of the Nasdaq — lagged. 

In the S&P 500, which closed the day 1.2% higher, the financial sector climbed 5%, led by a 7.9% gain in banking stocks and a 7.2% gain in consumer finance names. Travel stocks dominated the top of the index, with United Airlines (UAL), Norwegian Cruise Lines (NCLH), Royal Caribbean Cruises (RCL), American Airlines (AAL), Alaska Air Group (ALK) and Southwest Airlines (LUV) all enjoying double digit gains. The travel industry has been among the hardest hit by pandemic induced market volatility, and travel stocks are moving heavily on any vaccine related headlines, as investors look for a route to normality for global travel demand.

S&P 500: +1.2% Tuesday, -7.4% YTD (SPY)

Dow Jones Industrial Average: +2.2% Tuesday, -12.4% YTD (DIA)

Nasdaq Composite: +0.2% Tuesday, +4.1% YTD (COMP) 

FTSE 250 soars more than 3%, led by 52% gain from airline Tui

London-listed stocks started a shortened trading week on a positive note, with both the FTSE 100 and FTSE 250 closing the day higher. The FTSE 250 in particular, a more domestic focused index composed of smaller companies, enjoyed a stellar day, gaining 3.3%. It was reported that Chancellor Rishi Sunak will announce this week the end of new entrants to the UK government’s furlough scheme, which was put in place to support companies in order to avoid layoffs. 

Similar to the US, airlines led the way yesterday; Tui (TUIFF) topped the FTSE 250 with a 52% gain, while in the FTSE 100 International Consolidated Airlines Group (IAG) and easyJet (ESYJY) also posted double-digit gains. Cruise firm Carnival (CCL) and InterContinental Hotels Group (IHG) also drove the FTSE 100 higher, gaining 13.2% and 9.3% respectively. Sentiment was helped higher by an announcement made by Prime Minister Boris Johnson that non-essential retailers will be allowed to reopen in England from June 15.

FTSE 100: +1.2% Tuesday, -19.6% YTD

FTSE 250: +3.3% Tuesday, -22.6% YTD

What to watch 

Autodesk: Software firm Autodesk’s (ADSK) clients include engineering, architecture, construction firms and more. Its share price has held up well in 2020, gaining 8.8% year-to-date while the broader market has tumbled, taking its 12-month share price gain to 23.8%. Investors will be watching for how the shutdown of construction projects during the pandemic has hit the company’s bottom line when it reports its Q1 earnings today, and how its customers’ investments in new software may be impacted. The company has beaten earnings expectations in recent quarters, and currently 15 Wall Street analysts rate the stock as a buy or overweight, six as a hold, and three as an underweight or sell.

HP Inc: The coronavirus pandemic put an end to Xerox’s hostile bid for HP (HPQ) in March, with the firm withdrawing its offer and plans to nominate candidates to HP’s board, in the face of the major economic uncertainty posed by the current crisis. Xerox’s bid would have led it to take on a huge amount of debt, and the firm instead chose to focus on securing its balance sheet over continuing to pursue the deal. HP reports its latest set of quarterly earnings today, investors will be watching for how the pandemic is impacting consumer and business spending on PCs and printers. Analysts are anticipating an earnings per share figure of $0.45 for the quarter, down from $0.51 three months ago. 

Ralph Lauren: Fashion brand Ralph Lauren’s (RL) share price is down more than 30% year-to-date as discretionary spending on clothes has taken a huge hit because of the lockdown. In February the firm shut down most of its stores in China, although at the time CEO Patrice Louvet said that it was a “blessing to be underpenetrated” in the country, which represents less than 5% of sales. The company has been furloughing staff and cutting pay to navigate the crisis, and investors will be keen to hear about the firm’s plans for store reopenings as lockdowns ease. Currently, nine Wall Street analysts rate the stock as a buy or overweight, 10 as a hold, and one as a sell.

Crypto corner: Bitcoin miner Bitfury targets family offices with institutional offering

One of the first Bitcoin mining farms has given institutional investors a chance to back its business.

Bitfury, a Bitcoin mining and emerging technologies company, told Forbes this week that it was launching an institutional investor program which would allow professional investors an alternative way to invest in Bitcoin (BITCOMP).

Bitfury CEO Valery Vavilov reportedly told Forbes: “While this offering is attractive to different types of accredited investors, we believe one of the groups that will benefit most from this offering is family offices. Our streamlined avenue to diversification is designed specifically for their portfolios — exposure to digital assets without any of the operational/technical requirements of holding the digital assets/infrastructure themselves.”

All data, figures & charts are valid as of 27/05/2020.