Stocks finished sharply higher Monday after Federal Reserve Chairman Jerome Powell expressed optimism the country can begin to rebound in the second half of 2020, and a coronavirus vaccine candidate from Moderna (MRNA) showed positive results in early-stage trials.
The Dow Jones Industrial Average finished up 911 points, or 3.85%, to 24,597, the S&P 500 gained 3.15% and the Nasdaq rose 2.44%
Moderna shares soared 20% after the biotech company said results from their first human trial of its experimental coronavirus vaccine showed it could create an immune response in patients. The findings were based on results from the first eight people who received the vaccine.
The Cambridge, Mass., company said it would begin a phase 3 trial in July, earlier than it previously hoped.
Fed Chairman Powell said the U.S. can expect a gradual and likely bumpy recovery as lockdowns are lifted during the coronavirus pandemic, but he added that a full-blown sequel to the Great Depression isn't likely.
"The big thing we have to avoid," said Powell, in an interview with CBS News' "60 Minutes" on Sunday, "is a second wave of the virus."
The Fed chief said the recovery process could run through to the end of 2021 - "it'll be a while before we really feel well recovered," he said. And he added that the only path to a sure recovery will be a vaccine.
“For the economy to fully recover people will have to be fully confident, and that may have to await the arrival of a vaccine,” he said.
Assuming the U.S. can somehow escape a second wave of the coronavirus, it will see the economy recover steadily through the second half of 2020 after a potential peak jobless rate of up to 25% and dramatic shrinkage of gross domestic product, the Fed chairman said in the interview.
“In the long run and even in the medium run, you wouldn’t want to bet against the American economy,” Powell said during the interview.
“Powell addressing that the Fed is not out of ammo combined with positive vaccine trial data has set the markets off to the races,” Matt Miskin, co-chief investment strategist at John Hancock Investment Management, told Bloomberg. “It just shows that sentiment can change so quickly in times like these.”
Investors also cheered the reopening of the U.S. economy. California Gov. Gavin Newsom said about 75% of the state's economy had reopened, while Apple (AAPL) said more than 25 stores in the U.S. and 12 stores in Canada would reopen this week after being forced to close by the coronavirus pandemic.