S&P 500 closes 0.84% higher as positive vaccine news emerges from Oxford

The S&P 500 closed 0.84% higher, as investors reacted positively to news that a Covid-19 vaccine being developed by a team at the University of Oxford (in partnership with AstraZeneca)”generated robust immune responses”.

The results from the trial, which is currently at phase one/two, showed that nearly all of the 1,077 adult participants (aged 18-55) saw a 400% increase in antibodies to Covid-19’s virus spike protein following a single dose of the vaccine.

AstraZeneca (Ticker: AZN) shares were higher on the day by as much as 6% before crashing on the news to close just 1.45% higher.

The suggestion is that caution from the lead researcher at Oxford University, Sarah Gilbert, may have disappointed investors’ high hopes for the company versus its competitors’ vaccine efforts, as she said “there is still much work to be done to confirm if our vaccine will help”.

Turning to the day’s biggest mover on the S&P 500, Amazon saw its shares rise an astronomical 7.93%, as analysts at Goldman Sachs and Jefferies raised their target prices on the stock to $3800.

The key to the rationale behind their upward adjustments to target price was the acceleration of the secular trend in growth of online shopping and cloud-based computing.

As people around the world worked and did their shopping from home, Amazon’s dominant position in global e-commerce ensured it was well-positioned to reap the benefits.

In the first quarter of 2020, Amazon announced that net revenues had increased 26% YoY to $75.5 billion, while net income decreased to $2.5 billion versus the $3.6 billion the e-commerce giant earned in the first quarter of 2019.

Amazon reports second-quarter earnings on Thursday and has advised investors to expect between $75 billion & $81 billion in revenues (or 18% – 28% year-on-year growth), as well as operating income between -$1.5 billion and +$1.5 billion.

Management expect $4 billion in costs related to Covid-19, which is the key reason for its downbeat forecast for operating income.

Finally, shares in United Airlines, the beleaguered US airlines group, declined 4.69% to $32.33, as news regarding steps taken to create safe environments on its aircraft disappointed investors.

The airline’s consolidated average seat factor (percentage of occupied seats) was 38% in May, 57% in June and is forecasted to be just 45% this month. Moreover, only 15% of flights have had more than 70% of seats occupied, which is a statistic that underlines the market’s concern for the implication this will have on revenue.

In a bid to assuage fears about the safety in the enclosed spaces that aircraft are, United airlines interestingly announced that it had come up with an innovative way to reduce transmission of the virus through sneezing and coughing.

They intend on doing this by maximising air flow in the cabin and ensuring it flows top-to-bottom rather than from front-to-back, which would increase the risk of spread. Air flows down from the ceiling vents and exits through the floor, before passing through HEPA filters and mixing with fresh air from outside.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.