By Geoffrey Smith
Investing.com -- U.S. stock markets skyrocketed at the open on Monday, after Pfizer (NYSE:PFE) and its German partner Biontech (NASDAQ:BNTX) announced what looked like a major breakthrough in the search for a vaccine against the Covid-19 coronavirus.
The news propelled beaten-down cyclical stocks sharply higher, as investors bet on a return to traditional working and leisure habits after a year devastated by lockdowns, soaring unemployment and battered business and consumer confidence.
By 9:35 AM ET (1435 GMT), the Dow Jones Industrial Average was up 1,551 points, or 5.5% at 29,875 points, while the S&P 500 was up 3.8% and the Nasdaq Composite was up 0.7%.
Pfizer and Biontech said they are on track to ask regulators to approve the drug for treating the coronavirus by the end of the month, after a late-stage trial showed it was over 90% effective in preventing infection. The U.S.'s top infectious diseases expert Anthony Fauci has said that 60% effectiveness would be acceptable. Newswires quoted him as saying on Monday that a 90% success rate was "extraordinary."
Pending endorsement from regulators, the announcement makes the widespread distribution of a vaccine a realistic possibility early in the new year. Pfizer said it could manufacture and distribute 1.3 billion doses by the end of next year.
Pfizer stock rose 8.4% and Biontech stock rose 14.4%, but they were far from being the biggest beneficiaries of the news. That honor was reserved for the travel and leisure stocks that have seen their businesses decimated by the fear of infection. The rebound in consumer confidence that vaccine availability promises can make the difference between bankruptcy and viability to many stocks in these sectors, or at least reduce the risk of dilution via recapitalizations.
Accordingly, AMC Entertainment (NYSE:AMC), the world’s biggest operator of movie theaters, saw its stock rise 51%, while rival Cinemark (NYSE:CNK) stock rose 44%.
It was the same story with airlines and cruise stocks: Spirit Airlines (NYSE:SAVE) stock rose 25%, while JetBlue stock (NASDAQ:JBLU) rose 20%. Royal Caribbean Cruises (NYSE:RCL) stock rose 27% and Carnival (NYSE:CCL) stock rose 29%. Casino operator Wynn Resorts (NASDAQ:WYNN) rose 24%.
The flip side of the coin was equally sharp drops in the stocks that have profited most from the shift to remote working and online shopping this year: Zoom Video (NASDAQ:ZM) stock fell 17%, while Peloton Interactive (NASDAQ:PTON) stock fell 19.3%.
Another big loser - albeit unrelated to the Pfizer news - was Biogen (NASDAQ:BIIB) stock, which fell 32% after a Food and Drug Administration panel found overwhelmingly that its experimental drug for Alzheimer's was, in fact, ineffective. Biogen had soared last week on the news that the FDA was set to approve it. Alzheimer's is, after Covid-19, arguably the disease for which the rich world would pay most for a cure.