The prospect of a vaccine on the horizon turbocharged hopes on Wall Street that a pandemic game-changer is within grasp.
While Main Street continues to grapple with a slowing economic recovery, record COVID-19 infections, widespread layoffs, and an unemployment rate nearly double pre-pandemic levels, Wall Street is positioning portfolios for the economy investors think will take shape months from now.
For many investors, Pfizer’s vaccine news heralded that an eagerly anticipated “normalisation” is within grasp: an economy in which consumers skip the RV and book holidays that include flights and hotels. An economy where people watch movies in cinemas rather than stream them at home, or let their Pelotons gather dust while they head to gyms to sweat with strangers.
An economy unconstrained by the ever-present whiff of bleach.
US President-elect Joe Biden moved quickly to temper expectations in the wake of the Pfizer-BioNTech announcement, reminding the country that even if the vaccine is approved it will not be widely available for months.
“We’re still facing a dark winter,” he warned.
That did not stop the Dow Jones Industrial Average and the S&P 500 indexes from hitting new record highs during Monday’s session as investors rotated out of tech and other “stay at home” shares and into stocks brutalised by the pandemic – airlines, hotels, cruise and theatre operators, financial firms.
The “vaccine rally” stretched into Tuesday for the Dow, which weights its component companies by price. But the sell-off in tech dragged on the S&P, which weights its components by total market value.