News from U.S. drug company Moderna Inc. that its potential COVID-19 vaccine candidate has also been more than 90 per cent effective in clinical trials sent stock markets soaring on Monday, boosting hopes that the global economy may soon fully convalesce and things could get back to normal.
Moderna announced before markets opened on Monday that its vaccine candidate appears to be 94.5 per cent effective, according to preliminary data from the company's ongoing Phase 3 clinical trial of 30,000 volunteers.
The news echoed a similar announcement exactly one week ago from U.S. pharmaceutical company Pfizer, which sent investors cheering with word that its vaccine candidate appeared to be more than 90 per cent effective.
The news sent Moderna stock soaring eight per cent when stock markets opened on Monday, but it was also a badly needed shot in the arm for the stock market overall.
The Dow Jones Industrial Average gained more than 400 points to close at an all-time high of 28,880. The broader S&P 500 also set a record high above 3,619 points, while in Toronto the S&P/TSX Composite Index gained more than 200 points or 1.3 per cent to close at 16,889.
Industries that have been the hardest hit by the pandemic, including the energy sector and anything to do with travel and tourism, rebounded most. The price of a barrel of oil gained about three per cent to $41.24 US a barrel.
Shares in oil company Suncor gained about five per cent to $19.13, their highest level in a month. Air Canada was up by about four per cent to $20.19 a share around midday. Both companies are still worth less than half of what they were valued at before the pandemic.
Shares in technology companies that have done very well in the pandemic, meanwhile — such as Amazon, Netflix, and Zoom — sold off.
Even as cases continue to mount in most developed economies, the positive signs around Moderna's potential vaccine had investors feeling that the pandemic could be closer to its end than to its beginning.
David Doyle, head of North American strategy at Macquarie Group, said markets are caught in a tug of war between two things: good news about an end to the pandemic coming soon, and bad news about the reality of the virus today.
"I do think the more powerful force is the positive one, the vaccine," he said in an interview with CBC News.
"COVID-19 spread is still concerning, but every week we get closer to the vaccine."
While there appears to be a light at the end of the tunnel for the economy, Doyle says the road to get there is still treacherous, and the prospect of more lockdowns will always loom.
"I do expect more restrictions but I expect them to be very surgical and targeted rather than the broad brush," he said. "So the economic damage will be a whole lot less than what we saw in April and May."