Dow Jones futures trade down 205pts following Monday’s vaccine rally

Equity markets rally on vaccine hopes, futures market reverse the narrative

The Dow Jones Industrial Average and S&P 500 benchmarks rallied firmly overnight, while the tech-heavy Nasdaq 100 fell, after BioNTech and Pfizer announced that significant and promising progress had been made on the development of their covid-19 vaccine.

With a study comprised of over 40,000 participants, the companies reported that their experimental covid-19 vaccine ‘was found to be more than 90% effective in preventing COVID-19 in participants without evidence of prior SARS-CoV-2 infection.’

Importantly, both BioNTech and Pfizer noted that they were still collecting the required amount of safety and manufacturing data that the FDA required to grant a possible Emergency Use Authorization.

Despite such regulatory hurdles, it was reported that some 50 million doses of the vaccine could be produced by the end of CY20 and as many as 1.3 billion doses by the end of CY21.

Ultimately, while this vaccine news remains far from definitive – market participants responded as if it were a sure thing: The Dow Jones finished out the session up 834 points at the 29,157 point level, while the S&P 500 rose 1.17%. It was only the tech-centric Nasdaq 100 that fell behind, with the benchmark plunging 2.16% or 260 points to the 11,830 point level.

Looking at these market moves, IG Market Analyst Kyle Rodda said:

‘There was little concern for detail and nuance. But given the confidence of both companies that their vaccine was going to be a winner, maybe there need not be. Despite all the doubts, humanity and the marvels of medical science appears to moving ahead of schedule in ridding humanity of the virus.’

In that mad rush, perhaps investors were making a simple division – between the stocks that would benefit from a swift reopening of global commerce and those that wouldn’t, as much. Or maybe more technically – is it that valuations may finally be starting to matter again, with many high profile and high multiple tech stocks falling sharply on Monday.

Amazon and Facebook fell ~5%, Apple 2%, Netflix close to 9%, while Alphabet actually eked out a gain during yesterday’s session. Less prominent tech names that had run up during the height of the pandemic suffered even more pronounced losses: Used-car reseller Carvana plunged 7.55%, video software company Zoom crashed 17.55%, while e-commerce companies Etsy and MercadoLibre fell 17% and 10%, respectively.

Is tech’s outperformance over? Only time will tell.

Dow Jones lower following strong Monday session

Despite solid hopes of a vaccine, at the time of writing Dow Jones futures traded down around 205 points or 0.71% (10:02 PM New York time), suggesting the key US benchmark would open lower on Tuesday.

Nasdaq futures were also trading lower at the time of writing.

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