Vaccine hopes are powering Wall Street

Here’s one thing Wall Street investors can say that other Americans can’t: Things are looking really good.

Why it matters: The backdrop is the worst rate of coronavirus infections since the pandemic began. But that’s no match for a prospective vaccine down the line, which adds to already favorable conditions for investors.

• "Yes, new cases and hospitalizations are soaring, but we are inching closer to ending this pandemic," says Ryan Detrick, chief market strategist at LPL Financial.

What’s going on: Investors continued to pile into most risk assets on Monday, following early trial data showing Moderna’s coronavirus vaccine was 94.5% effective.

• Stocks closed at all-time highs. The Dow cinched a new record for the first time since the pandemic hit. (It’s also closing in on the 30,000 mark.)
• Notably, "stay-at-home" companies didn’t broadly sell off like last week when Pfizer released early vaccine trial results, with companies like Peloton rising yesterday. Some Big Tech stocks also rose.
• Oil prices jumped 3%.

Meanwhile, the yield on the 10-year U.S. Treasury note jumped to 0.91% from 0.89% on Friday. (It jumped more than 10 basis points after the Pfizer news last week).

The good news about vaccine progress adds to the better-than-expected developments that have emerged for Wall Street and corporate America during an unprecedented pandemic. Among them:

• Corporate profits that have surprised to the upside.
• Companies confident enough to resume buybacks and dividend payments. (Costco on Monday said it would pay out a special cash dividend this year.)
• Interest rates that will be lower for longer.

Between the lines: The Fed’s ongoing response to the pandemic has played a massive role in buoying investors.

• What to watch: Wall Street is increasingly betting the Fed will make changes to its bond buying program as soon as its next meeting. Fed officials aren’t exactly swatting off that notion.
• What they’re saying: "The Federal Reserve is committed to using all of our available tools — not just the federal-funds rate and forward guidance, but also large-scale asset purchases — to achieve our dual-mandate goals," Fed vice chair Richard Clarida said in a speech on Monday.

The bottom line: "Our glass half-full outlook is bolstered by benign inflation, low interest rates, improving growth trends of earnings, ongoing monetary and fiscal stimulus policies, and medical progress for COVID-19," analysts at U.S. Bank wrote in a note to clients.