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Nasdaq Jumps Despite Costco Pullback; Novavax Starts Vaccine Phase 3 Trial

By Dan Caplinger – Sep 25, 2020 at 11:55AM

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Investors went into the weekend on an optimistic note.

Stock market volatility has been especially high in September, but there've been moves in both directions. On Friday morning, the Nasdaq Composite (^IXIC) managed to move higher, lifted by hopes that some of the worries that have bothered market participants might start to subside. By just after noon EDT, the Nasdaq was up more than 1%.

Earnings season is right around the corner, and late Thursday, Costco Wholesale (COST -1.91%) gave investors its latest assessment on how its warehouse retail business is doing. Elsewhere, Novavax (NVAX -5.30%) got a big boost as the company moves forward on what could be the most important project in its history.

Forklift in aisle at warehouse store with lots of boxes and packages.

Image source: Getty Images.

Costco falls despite solid earnings

Shares of Costco Wholesale eased lower by 2%. The downward move came despite the retailer posting good results in its fiscal fourth quarter.

Costco reported a 12.5% rise in revenue for the quarter, capping a year in which the top line grew 9.3%. Costco's comparable sales were particularly strong, with a 14.1% rise in the fourth quarter after adjusting for impacts from gasoline prices and foreign exchange movements. Net income jumped 27% year over year, and per-share earnings were higher than most investors had anticipated.

Some investors had feared that the COVID-19 pandemic would hurt Costco and its in-person warehouse shopping experience. However, customers have taken to the company's e-commerce channel, as e-commerce comps soared more than 90% for the quarter.

Members continue to renew their Costco memberships, and demand for consumer staples remains strong. That puts Costco in a great position for future growth in its retail operations.

Seeking a COVID solution

Elsewhere, shares of Novavax jumped 12%. The biopharmaceutical company is working hard toward finding a permanent solution to the COVID-19 pandemic, and shareholders have high hopes that it will be successful soon.

Novavax is starting a phase 3 clinical trial on its NVX-CoV2373 coronavirus vaccine candidate. The study will happen in the U.K., with the government there taking on a partnership role in driving it forward. The company hopes to get as many as 10,000 participants in the trial, which will look at how safe the vaccine is and whether it's effective in getting patients to generate immune responses to fight the coronavirus. A U.S. trial could come in the near future.

Novavax isn't the only company in late-stage trials of a COVID vaccine. Among rivals are Johnson & Johnson (JNJ -1.10%), AstraZeneca (AZN 0.40%), Moderna (MRNA -3.34%), and Pfizer (PFE -0.61%).

However, with so much demand for vaccine, there should be room for all comers to sell effective products. That's what has investors excited about Novavax's prospects Friday, and further gains could come if NVX-CoV2373 proves to be a winner in fighting COVID-19.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends Costco Wholesale, Johnson & Johnson, and Nasdaq. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Costco Wholesale Corporation Stock Quote
Costco Wholesale Corporation
$478.98 (-1.91%) $-9.31
Novavax, Inc. Stock Quote
Novavax, Inc.
$18.57 (-5.30%) $-1.04
Pfizer Inc. Stock Quote
Pfizer Inc.
$44.16 (-0.61%) $0.27
Johnson & Johnson Stock Quote
Johnson & Johnson
$164.53 (-1.10%) $-1.83
NASDAQ Composite Index (Price Return) Stock Quote
NASDAQ Composite Index (Price Return)
$11,051.64 (%)
AstraZeneca PLC Stock Quote
AstraZeneca PLC
$54.91 (0.40%) $0.22
Moderna, Inc. Stock Quote
Moderna, Inc.
$118.07 (-3.34%) $-4.08

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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