Nasdaq hits record, S&P 500 tops 3,200 as investors brace for earnings season, weigh vaccine news

Stocks got off to a positive start on Monday as investors prepared for a tough earnings season and applauded news that the Food and Drug Administration granted “fast track” status to a pair of vaccine candidates produced by Pfizer Inc. and German biotech firm BioNTech SE.

What are major benchmarks doing?

The Dow Jones Industrial Average DJIA, +1.23% rose 211 points, or 0.8%, to 26,286. The Nasdaq Composite COMP, +1.47% gained 150 points, or 1.4%, to 10,987, setting a new intraday record at the start of trading. The S&P 500 SPX, +1.01% rose 24 points, or 0.8%, to 3,210.

Stocks rose in thin trade last week, with tech stocks firmly in the lead. The Nasdaq Composite on Friday scored its third consecutive record close and logged a 4% weekly rise ending Friday at 10617.44. The Dow saw a 1% weekly rise to 26,075.30, while the S&P 500 advanced 1.8% for the week to 3,185.04. Friday’s session, meanwhile, saw the lowest daily volume since Feb. 21, according to Dow Jones Market Data.

What’s driving the market?

Earnings season is set to kick off this week. The bar, as a result of the pandemic, has been set remarkably low and analysts will be watching results for clues to a third- and fourth-quarter rebound that skeptics say might be difficult to fulfill.

Earnings Outlook:S&P 500 earnings set to plunge as the coronavirus batters all sectors — with Wall Street counting on a bounce that may not come

“Earnings for S&P 500 companies are estimated to have slumped by about 44% in the second quarter and given the impressive pace at which consumption bounced back in the United States and elsewhere after the lockdowns were eased in May, many firms will have an easy job in beating the gloomy forecasts,” said Raffi Boyadjian, senior investment analyst at XM, in a note. “And this is what most traders appear to be betting on.”

Stocks have shaken off a renewed rise in the number of coronavirus cases, which have surged across much of the Sun Belt, though analysts have warned that the resurgence threatens to slow if not derail the rebound in economic activity if officials reinstate lockdown measures.

Investors have also largely brushed aside the threat of renewed U.S.-China tensions. President Donald Trump on Friday said there was no scope for a phase two agreement on trade between the two countries, saying Washington’s relationship with China had been “severely damaged” by the coronavirus pandemic, which the administration has sought to blame on Beijing. China’s move to crack down on Hong Kong with the passage of strict new national security laws has also raised tensions.

China on Monday said it would bar entry to the country by U.S. Senators Marco Rubio and Ted Cruz, Rep. Chris Smith and Ambassador for Religious Freedom Sam Brownback over their criticism of the ruling Communist Party’s policies toward minority groups and people of faith. The move comes after Washington last week sanctioned senior Chinese Communist Party officials over alleged human-rights abuses in western China.

See:U.S. wants to sanction China over Hong Kong, but faces limited options

Instead, investors have paid closer attention to Chinese equities, which have surged to the approval of Chinese authorities and have appeared to help spark global equity gains.

Read:China’s stock market just jumped 6%. This is a good thing and Westerners should be glad. No, really.

New York Fed President John Williams is scheduled to deliver a video speech on the shift away from Libor at a Bank of England/ New York Fed conference at 11:30 a.m. Eastern, while Dallas Fed President Robert Kaplan is due to deliver a speech at the National Press Club at 1 p.m. Eastern

Which companies are in focus?

Shares of Pfizer Inc. PFE, +4.95% and BioNTech SE BNTX, +14.59% jumped after the companies announced that two of their vaccine candidates to protect against the virus that causes COVID-19 received Fast Track status from the Food and Drug Administration. Pfizer’s shares were up 3.1% while BioNTech’s shares gained 9.4%.

Shares of PepsiCo Inc. PEP, +1.90% rose 2.4% after the beverage and snack giant reported second-quarter profit and revenue that declined less than expected thanks to a resilient snacks and food business amid the COVID-19 pandemic.

In deal news, chip maker Analog Devices Inc. ADI, -4.32% on Monday said it had agreed to acquire Maxim Integrated Products Inc. MXIM, +10.98% in an all-stock deal with a combined enterprise value of over $68 billion. Shares of Analog Devices rose 1.1%, while Maxim shares were up nearly 15%.

AMC Entertainment Holdings Inc.’s shares AMC, -4.13% rose 3.4% after the owner of the world’s biggest cinema chain said it had reached an agreement to reduce its debt by at least $460 million and has secured $300 million in new funding.

Electric vehicle maker Fisker Inc. is going public, through a reverse merger with a blank-check company Spartan Energy Acquisition Corp., sponsored by private-equity firm Apollo Global Management. Shares of Spartan SPAQ, +17.90% surged 13%.

What are other markets doing?

In Asia, the Shanghai Composite SHCOMP, +1.77% rose 1.8%, while the CSI 300 Index 000300, +2.10% advanced 2.1%. Japan’s Nikkei 225 Index NIK, +2.21% rose 2.2%, while the Hang Seng Index in Hong Kong HSI, +0.17% edged up 0.2%.

In Europe, the pan-European SXXP, +0.84% Stoxx 600 Europe Index rose 0.8%, while London’s FTSE 100 UKX, +1.24% gained 1.1%.

The yield on the benchmark 10-year Treasury note TMUBMUSD10Y, 0.651% was up 2.8 basis point at 0.66%. Yields and bond prices move in opposite directions. The ICE U.S. Dollar Index DXY, -0.37%, a measure of the currency against a basket of six major rivals, was off 0.2%.

Oil futures were under pressure, with the U.S. benchmark CL.1, -0.69% down 0.3% to $40.43 a barrel after The Wall Street Journal over the weekend said Saudi Arabia was pushing OPEC and its allies to ease production curbs beginning in August. Gold GC00, +0.40% futures were higher, trading up 0.9% to $1,817.30 an ounce.