By Geoffrey Smith
Investing.com — U.S. stock markets opened higher on Friday, reversing overnight losses in futures after potentially game-changing news on the pandemic front from U.S. pharma giant Merck.
Merck announced encouraging early results from a small-scale trial of a antiviral pill to treat Covid-19, which showed a clear drop in the rate of severe illness among those taking it. If the drug is found to be both safe and effective, it could radically change the outlook for building humanity’s defenses against the disease.
Such considerations ensured that the Dow Jones Industrial Average rose 149 points, or 0.4%, higher in the first few minutes of trading, while the S&P 500 rose 0.1%. The Nasdaq Composite, which habitually underperforms on news supporting the reopening of pandemic-stricken economies, fell 0.2%.
All three indices had been clearly lower in premarket trading before Merck’s news broke.
Merck stock rose 7.8% on the news. Before the news, it had been down around some 10% since the start of the pandemic, underperforming rivals such as Moderna and Pfizer who had successfully brought to market a new generation of messenger RNA-based vaccines.
Moderna (NASDAQ:MRNA) stock was down 9.8% on the news, while BioNTech (NASDAQ:BNTX) stock was down 11% and Pfizer Inc (NYSE:PFE) stock down 2.2%. Novavax (NASDAQ:NVAX) stock fell 17%, while AstraZeneca (NASDAQ:AZN) ADRs fell 1.2%.
The news also gave wings to other sectors typically sensitive to social distancing and lockdown measures. Delta Air Lines (NYSE:DAL) stock rose 5.2% while United Airlines (NASDAQ:UAL) stock rose 5.8% and American Airlines (NASDAQ:AAL) stock rose 3.7%. Hotel operators Hyatt (NYSE:H) and Marriott (NASDAQ:MAR) each rose 3.8%, and cruise operators Carnival (NYSE:CCL) and Royal Caribbean (NYSE:RCL) both rose around 4%. Uber (NYSE:UBER) stock rose 3.6%.
Elsewhere, Jefferies (NYSE:JEF) stock rose 1.9% after reporting earnings that nearly doubled in the latest quarter due to the boom in merger and acquisition activity in the U.S.
Zoom Video (NASDAQ:ZM) stock rose 0.6% and Five9 (NASDAQ:FIVN) stock rose 0.5% as the two companies abandoned plans to combine.
Earlier, a week full of economic data had ended on an upbeat note, with both the Institute of Supply Management’s manufacturing survey and the University of Michigan’s consumer sentiment coming in ahead of expectations. The ISM study in particular remains indicative of a strong expansion, with an index at a four-month high of 61.1. Personal income and spending data, released earlier showed incomes nearly flatlining in August, but spending still running ahead of expectations with a monthly gain of 0.8%.
Price data for personal consumer expenditures, the Federal Reserve’s preferred measure of inflation, didn’t change expectations that the Federal Reserve will begin phasing out its bond purchases in November. Minnesota Fed President Neel Kashkari, a noted inflation ‘dove’ said on Thursday said he was comfortable with such a timeline, suggesting that there is no resistance among policymakers to such a move.