Updated at 9:47 a.m. ET
Stocks soared to record highs Monday after Pfizer said its experimental COVID-19 vaccine was 90% effective, providing a major dose of hope for the battered global economy.
The Dow Jones Industrial Average was up about 1,300 points shortly after the market open, an increase of 4.6%. The S&P 500 rose was up 3.4%. Both indexes set record highs, surpassing the previous milestones hit earlier this year.
The Nasdaq composite index, which is dominated by tech stocks such as Netflix that benefit from stay-at-home restrictions, was up 1.3%.
Airlines and travel-related companies, which have been slammed by the pandemic, were also up sharply. United Airlines was up by 20%, while Delta was up 15%. Carnival was up 37%.
Other sectors that would directly benefit from improving business activity, such as banks, also gained.
The pandemic has led to millions of layoffs and business closures around the world, bringing the global economy to a grinding halt. Recently, cases of the virus have surged again in Europe and the United States, forcing government officials to reimpose lockdowns.
A vaccine is seen as a key catalyst for controlling the pandemic.
Earlier on Monday, pharmaceutical giant Pfizer and its partner BioNTech said their experimental vaccine was 90% effective in preventing COVID-19. It is the first of the vaccine attempts to reach the clinical milestone.
"Even as rising case numbers have triggered modest news restrictions in the U.S. and Europe, the base case remains that vaccines and improved treatment will bring the pandemic under control enough to allow economic activity to recover during the first half of next year," says Christopher Smart, chief global strategist at Barings Investment Institute.
Markets were already expected to open higher on Monday after former Vice President Joe Biden was elected president over the weekend.
Stocks have been trading higher for days, with the S&P 500 surging 7.3% last week.
Biden's election, together with the likelihood that the Senate will remain in GOP control, could mean a new era of divided government, something the market has traditionally liked.
The final make-up of the Senate hinges on two Georgia runoffs scheduled for January.
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