A Collective Sigh of Relief Pushes the Stock Market Up


Prices for government bonds — where investors traditionally park funds during times of uncertainty — dropped sharply, pushing yields, which move in the opposite direction, to some of the highest sustained levels in months. The yield on the 10-year Treasury note rose to 0.95 percent on the day, its highest level since the pandemic struck this year. The rise in yields reflects growing optimism among investors for economic growth.

Benchmark American crude oil prices were catapulted 8.5 percent higher to $40.29 a barrel on renewed optimism about global demand in a recovery. The energy sector was the best-performing part of the S&P 500, rising more than 14 percent.

On Wall Street, trading desks buzzed as large investors urgently sought to make trades. By around 11 a.m., the brokerage firm Liquidnet — which specializes in executing trades of large blocks of shares for institutional investors — had already seen roughly an entire day’s worth of trading activity, said Simon Maughan, a top trader at Liquidnet.

Despite the outsize market moves on Monday, several analysts suggested that there were reasons for investors to be cautious. Stock prices have staged an enormous turnaround, rising nearly 9 percent in six trading sessions.

“These are the types of moves that tend to run out of gas if the underlying data doesn’t quickly confirm the enthusiasm,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management.

In the near term, the data on the growth of the virus in the United States is clearly moving in the wrong direction. Case counts have hit record highs in recent days, and continue to run at more than 100,000 new infections a day. Several analysts say the rampant spread of the virus could prompt a return of restrictions that could hurt the American economy over the coming months.

Despite Pfizer’s encouraging update, there is considerable uncertainty about the path forward for the vaccine. Independent scientists have warned against hyping early results without adequate long-term safety and efficacy data. It remains unclear how long the Pfizer vaccine’s protection might last against the virus. And even if the drug is approved, the production and distribution of hundreds of millions of doses will be daunting challenges.

“The difference between having a vaccination and having 330 million vaccinations is huge,” said Scott Clemons, chief investment strategist for private banking at Brown Brothers Harriman, an investment bank. “So you’ve still got the possibility of more economic weakness, maybe even the possibility of a double-dip recession until that vaccine is available.”



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