Wall Street Close: Bulls fully back in charge on hopes of vaccine breakthrough

• The S&P 500 rose 29.04 points, or 0.9%, to 3,226.56.
• The Dow Jones Industrial Average gained 227.51 points, or 0.9%, to 26,870.10.
• The Nasdaq Composite added 61.91 points, or 0.6%, to 10,550.49.

US stocks closed broadly higher on Wall Street Wednesday as investors pin their hopes of a COVID-19 vaccine coming to the market by year-end. 

Subsequently, industrial, health care, financial and technology companies took the reign of the markets.

 Small-company stocks were big gainers and bond yields were mostly higher as prospects of inflation comes back to the table, (inflation erodes the purchasing power of a bond's future cash flows).

Adding to the positive vibe, ahead of this weekend's EU summit, were comments from German Chancellor Merkel that Germany is prepared to compromise in order to reach a deal for the European Recovery Fund.

Also, flowing on from yesterday's news conference, where US President Donald Trump signed the Hong kong executive order, later was reported today saying that he doesn’t want to worsen tensions with Beijing, ruling out further sanctions on officials, for now.

• Breaking: US will have effective Covid-19 vaccine by year-end – Fauci 

Meanwhile, Moderna reported that its trial vaccine produced neutralising antibodies in patients who received two doses, equivalent to levels seen in COVID-19 patients who recover.

Analysts at ANZ Bank explained:

These results were from an initial safety trial (45 patients, ages 18-55), and efficacy can only be properly demonstrated in a large trial. T

here was also high incidence of side effects.

A large trial will begin on July 27, with 30,000 healthy people, comparing the vaccine to placebo, including people in older, high-risk age brackets. If a vaccine can be produced, it will be a game changer, so results like this are encouraging.

But producing one for widespread use is a long way off and the outlook is bleak until then.

Without a vaccine, devastating health impacts will continue, with significant economic implications.

The stakes couldn’t be higher.

US data on the positive tip

In data today, the US Empire manufacturing for June beat expectations, rising to 17.2 points (exp: 10, prev: -0.2), its highest level since late 2018.

The rise was largest among the orders and shipments sub-indices; employment was only slightly positive.

Optimism about conditions over the next six months deteriorated.

Industrial production beat expectations, rising 5.4% m/m (exp: 4.3%, prev: 1.4%). But the durability of the recovery is in doubt, given the rise in US case numbers and increased restrictions,

the analysts at ANZ Bank explained. 

We also had the Beige Book and it was shown that economic activity increased in almost all districts.

Here are some of the key positive takeaways from the report:

"Consumer spending picked up as many nonessential businesses were allowed to reopen."

"Retail sales rose in all districts, led by a rebound in vehicle sales."

"Demand for professional and business services increased in most districts but was still weak."

"Employment increased in all districts as businesses reopened or increased activity, gains in retail and hospitality highlighted."

Full news: Fed's Beige Book: Economic activity increased in almost all districts

 

S&P 500 price analysis

• S&P 500 Price Analysis: No close above the significant 3,233.25 resistance zone for now