The Dow Jones Industrial Average (DJINDICES:^DJI) was up 4.25% at 12:20 p.m. EST Monday after Pfizer announced that early data suggests a vaccine in development prevented COVID-19 in 90% of cases. While the results are preliminary and wide distribution of any vaccine won't happen until next year, the news sent stocks flying.
Shares of Boeing (NYSE:BA) were up big as investors became more optimistic on the recovery of the travel industry. Meanwhile, shares of McDonald's (NYSE:MCD) fell behind despite a strong third-quarter earnings report.
Pfizer announces positive vaccine data
A vaccine for the novel coronavirus that has infected over 50 million people and is responsible for over 1.25 million deaths was found to be 90% effective at preventing COVID-19. That news comes from Pfizer, which plans to apply for Emergency Use Authorization later this month.
This result is based on a study that isn't yet complete, so the prevention rate may not remain so high once all the data is considered. But Anthony Fauci, the top infectious disease expert for the U.S. government, called the findings "just extraordinary."
If the vaccine's effectiveness holds up, around 50 million doses of the two-shot vaccine could be ready by the end of the year. It may be well into 2021 before the vaccine has been distributed widely enough to put an end to the pandemic. Still, this is the best vaccine news so far, and it's given a big boost to the stock market.
Boeing surges on vaccine news
Shares of beleaguered airplane manufacturer Boeing got a boost along with other aviation and travel stocks on Monday following the Pfizer vaccine news. Boeing stock was up about 12.9% by early afternoon.
Last month, Boeing reduced its market outlook for commercial airplanes over the next decade due to the pandemic. The company is more optimistic over a 20-year timespan, but it's clear that it will take considerable time for the industry to fully recover.
While a successful vaccine will end the pandemic and allow people return to their pre-pandemic ways of life, the economic impact will likely be here to stay. That's especially true if Congress is slow to pass additional stimulus, or if that stimulus isn't big enough. A weak economy could hurt demand for air travel for years to come, although pent-up demand for travel from consumers with cash to spend will help the cause.
While Boeing was rallying hard on Monday, the stock is still down about 45% since the start of the year.
McDonald's stumbles after solid results
Fast food chain McDonald's wasn't participating in Monday's rally despite a third-quarter earnings report that beat analyst expectations. The stock was down about 2.2% by early afternoon.
Global comparable sales fell 2.2% in the third quarter, but U.S. comparable sales were up 4.6%. Total revenue of $5.42 billion was down 2% year over year, but it was ahead of analyst expectations by about $50 million. Despite the sales decline, McDonald's managed to grow adjusted per-share earnings by 5% to $2.22. That number beat the average analyst estimate by $0.32.
Almost all of McDonald's restaurants were open during the third quarter, but the company said that new pandemic restrictions in many key markets outside of the U.S. have begun affecting its results since September. Even with a potential vaccine in the wings, a tough winter for the U.S. and Europe could undo some of the company's recovery.
While McDonald's is missing out on Monday's stock market surge, shares of the restaurant chain are still up more than 7% this year.