Global stocks rally on potential coronavirus treatment
FDA’s emergency-use approval of convalescent plasma prompts increased appetite for risky assets, putting S&P 500 index on track to hit a record high
Global stocks and U.S. equity futures advanced Monday, putting the S&P 500 index on track to hit an all-time high, as investors’ optimism about a potential treatment for the coronavirus buoyed markets.
Futures tied to the S&P 500 rose 0.6%, suggesting that the U.S. stocks benchmark may open higher after closing at a record on Friday. Overseas, the pan-continental Stoxx Europe 600 climbed 1.4%, while most major Asian markets closed higher.
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The Food and Drug Administration on Sunday said it authorized use of convalescent plasma, the antibody-rich blood component taken from recovered Covid-19 patients, for the treatment of serious coronavirus cases. The emergency-use authorization falls short of a full approval, FDA Commissioner Stephen Hahn said, adding that the agency will evaluate more evidence.
“Any news that’s positive on the virus is going to drive markets higher,” said Seema Shah, chief strategist at Principal Global Investors. “However, any news on a vaccine or treatment has to be treated with skepticism, given the process it has to go through before it’s used by the general population.”
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Investors and economists also continue to weigh data on new coronavirus infections in a bid to determine how sustainable any economic recovery may prove. The number of new cases in the U.S. declined from a day before, reaching its lowest level in more than two months and notching a ninth straight day with fewer than 50,000 new cases.
“The most effective U.S. states have apparently managed to get this virus under control without having to resort to harsh lockdowns and more economic damage,” said Holger Schmieding, chief economist at Berenberg Bank. “The labor market continues to improve, but at a mild pace. This is encouraging: the world’s largest economy is starting to recover.”
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The S&P 500’s sharp rally since the spring—despite a recession—suggests investors are betting the worst of the economic pain is past and that corporate earnings, the most reliable driver of stock prices, will begin climbing again next year.
In bonds, the yield on the benchmark 10-year U.S. Treasury ticked up to 0.641%, from 0.639% Friday.
In Asia, shares in Tencent Holdings rose 5.8% in Hong Kong following media reports that the U.S. officials had privately reassured American companies that they could continue to work with its popular social media app WeChat, analysts said.
Write to Anna Isaac at anna.isaac@wsj.com