Major Indices Fall Despite Positive Coronavirus Vaccine Data

The S&P 500, Dow Jones and Nasdaq ended in red on Wednesday despite strong data from the final efficacy analysis of Pfizer PFE/BioNTech’s BNTX phase III study evaluating their mRNA-based COVID-19 vaccine candidate, BNT162b2. Markets declined as rising coronavirus infections in the United States, shutdowns in some major cities and stalling of stimulus legislation negotiations overshadowed investors’ enthusiasm about encouraging vaccine data.

Coronavirus Data

We note that Pfizer and BioNTech announced data from the final efficacy analysis of their ongoing phase III study on BNT162b2. Data showed that the candidate met all primary efficacy endpoints of the study with vaccine efficacy rate of 95%. Moreover, BNT162b2 did not raise any serious safety concern and also passed the FDA’s safety milestone required for an Emergency Use Authorization ("EUA"). Pfizer and BioNtech expect to file for an EUA “within days”. Per a Reuters article, BioNTech expects authorization/approval for the candidate in Europe around mid-December.

Infections & Restrictions

Although shares of Pfizer and BioNtech were up 0.8% and 4%, respectively, on Wednesday on encouraging final analysis data on their coronavirus vaccine candidate, it did not help markets sustain their upward journey. While Dow Jones and S&P 500 declined almost 1.2%, Nasdaq was down 0.8% on Nov 18. Per a Reuters article, New York City has restricted in- person learning in schools from Nov 19 following a surge in new coronavirus infections. The city had been the epicenter of the coronavirus pandemic in the United States earlier this year during the “first wave” of infection.

The same Reuters article states that among 50 U.S. states, 41 states have reported increase in daily infections so far in November. Apart from New York, major cities like Boston, Detroit, Las Vegas and Philadelphia recently cancelled in-person learning due to rising infections. Investors are becoming wary of these rising infections or what is termed as the “second wave” despite encouraging developments on the vaccine front. The rising number of cases can lead to new restrictions and in worst case another lockdown, which will hamper businesses and overall economic development.

On Nov 13, the United States recorded its highest daily infection cases of 181,571. Total infections crossed 11.6 million leading to more than 250,000 deaths.

Stimulus Package & FDA Authorization

Negotiation for a new fiscal stimulus package was stalled due to U.S elections and a tussle between the Republicans and Democrats in the Congress, per a Yahoo article. Although president elect, Joe Biden, is in favor of a stimulus package worth trillions of dollars, the parties need to converge on a deal to pass it in the Congress.

We note that an FDA authorization for any coronavirus vaccine may prove beneficial for people and the economy. However, unavailability of long-term safety data and skepticism among citizens about vaccines may hinder proper distribution. Apart from Pfizer and Moderna, AstraZeneca AZN and J&J JNJ are also developing their coronavirus vaccine candidates in late-stage development and several others in earlier-stages. We may see billions of doses of these potential vaccine candidates being made available to the public in 2021. Successful vaccine distribution, inoculation of citizens and proper maintenance of social distancing rules are likely to help in faster recovery of the U.S. economy.

Pfizer, AstraZeneca, J&J, Moderna and BioNTech all carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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