Stocks Fall After Moderna Vaccine Study Questioned: Markets Wrap

Equities rose in Tokyo, Sydney and Seoul, though the magnitude of the advance was less than in the U.S.

20 May 2020, 08:36 AM IST

Stocks Fall After Moderna Vaccine Study Questioned: Markets Wrap

People walk past the Nasdaq MarketSite in the Times Square area of New York, U.S. (Photographer: Angus Mordant/Bloomberg)

(Bloomberg) -- U.S. stocks fell for the first time in four sessions after reports circulated that Moderna Inc.’s vaccine study, which was credited in part for Monday’s rally, didn’t produce enough critical data to assess its success. Crude oil and Treasuries gained.

The S&P 500 and Nasdaq Composite turned negative in the last hour of trading, while the Dow Jones Industrial Average extended its losses. Equities had fluctuated much of the day after optimism over the drug as a potential coronavirus vaccine sent the S&P up the most Monday in almost six weeks. Crude oil rose for a fourth day.

“We’re going to continue to see volatility because every day the market’s taking any little piece of information it has about things and prices it in,” said Peter Mallouk, president and chief investment officer of Creative Planning. “Every day it’s taking every little piece of information and it’s instantly pricing it in. Everything else is a derivative of Covid-19 now.”

Earlier, Federal Reserve Chairman Jerome Powell reiterated during a Senate hearing that the central bank is ready to use all the weapons in its arsenal to help the U.S. economy endure the coronavirus pandemic.

The Stoxx Europe 600 Index retreated as investors showed little reaction to both news of a $546 billion recovery fund for the region and a surprise jump in German investor confidence. European government bonds were mixed. Sterling strengthened after the U.K. announced plans for 30 billion pounds ($37 billion) in tariff cuts after Brexit.

Riskier assets had started the week on the front foot after the Moderna news fueled hopes for a coronavirus vaccine, but investors are struggling to maintain the optimism as they continue to monitor efforts to both contain the pandemic and restart economies.

“A vaccine would be a bullish game changer, and stocks reacted accordingly,” Tom Essaye, author of “The Sevens Report” newsletter, wrote in a note. “But one day doesn’t make a sustainable move.”

Headwinds remain for stocks, not least a deteriorating U.S.-China relationship. In a further sign of tightening scrutiny on capital flows to the Asian nation, Nasdaq is set to unveil new rules for initial public offerings including tougher accounting standards that will make it more difficult for some Chinese companies to list on the exchange.

Asian equities rallied, tracking the big gains on Wall Street from a day earlier.

These are some of the main moves in markets:

Stocks

The S&P 500 Index dipped 1% to 2,922.94 as of 4:01 p.m. New York time.

The Dow Jones Industrial Average sank 1.6% to 24,206.86.

The Nasdaq Composite Index fell 0.5% to 9,185.11.

The Stoxx Europe 600 Index decreased 0.6% to 339.49.

The MSCI All-Country World Index declined 0.2% to 490.82.

Currencies

The Bloomberg Dollar Spot Index was little changed at 1,247.67, the lowest in more than a week.

The euro advanced 0.1% to $1.0924, the strongest in more than two weeks.

The Japanese yen depreciated 0.4% to 107.73 per dollar, the weakest in almost four weeks on the biggest decrease in more than a week.

The British pound increased 0.5% to $1.2253, the strongest in a week.

Bonds

The yield on two-year Treasuries declined one basis point to 0.17%, the biggest fall in a week.

The yield on 10-year Treasuries fell four basis points to 0.69%, the largest fall in a week.

Germany’s 10-year yield gained less than one basis point to -0.46%, the highest in more than three weeks.

Britain’s 10-year yield decreased one basis point to 0.245%.

Commodities

West Texas Intermediate crude advanced 2.1% to $32.50 a barrel, the highest in more than two months.

Gold strengthened 0.8% to $1,746.21 an ounce, the highest in more than seven years.