Dow and S&P 500 reach new highs on vaccine hopes

The Dow Jones industrial average rose to a record Monday for the first time in nine months, riding a swell of optimism that a vaccine may soon control the coronavirus and the economic destruction it’s caused.

Moderna said early in the morning that its COVID-19 vaccine appears to be 94.5% effective, based on preliminary data. It’s the second time this month that a company unveiled such encouraging numbers about a vaccine, boosting hopes that the global economy can return to some semblance of normal next year.

Leading the way again were stocks of companies that would benefit most from an economy busting out of its forced hibernation, such as airlines, movie theaters and banks. At the same time, pandemic-winning stocks that benefited from lockdown orders, including Amazon and Zoom Video Communications, lagged as they no longer looked like the only safe bets to play.

The Dow jumped 470.63 points, or 1.6%, to 29,950.44. It surpassed its previous closing record of 29,551.42, set in February before pandemic panic sent stocks plunging.

The Standard & Poor’s 500 index, which matters more to the performance of most 401(k) accounts, topped its own record set Friday. It rose 41.76 points, or 1.2%, to 3,626.91. The Nasdaq composite gained 94.84 points, or 0.8%, to 11,924.13. It lagged the rest of the market amid lessened interest for tech stocks.

Treasury yields, oil prices and stocks around the world also rallied on the shot of increased optimism. A vaccine is precisely what markets have been waiting for to pull the global economy out of its cavern, and analysts say it’s a game changer.

Of course, for all its euphoria, many risks remain for the market. Even if one or both vaccines are finally approved, it’s still uncertain when they could be widely distributed.

The pandemic is continuing to worsen, meanwhile, with rising coronavirus counts across the United States and Europe pushing governments to bring back varying degrees of restrictions on businesses.

The yield on the 10-year Treasury rose to 0.90% from 0.87% late Friday.

Tesla will be added to the S&P 500 on Dec. 21, the index announced after the closing bell. Tesla shares jumped nearly 14% in after-hours trading.

Airbnb laid the groundwork for a much-anticipated initial public offering of its stock, revealing Monday in a regulatory filing that it was losing money even before the pandemic struck and cut its revenue by almost a third.