Another day of positive results from a possible coronavirus vaccine and an update for a tech giant lifted the S&P 500 Index (SNPINDEX: ^ SPX) 27 points, or 0.8% on Monday. According to a report in a major medical journal, AstraZeneca‘s (NYSE: AZN) The AZD1222 vaccine candidate reported positive results in an early-stage trial, while the stock of Amazon (NASDAQ: AMZN) got a major analyst update on Goldman Sachs (NYSE: GS), raising the company’s $ 1.5 trillion shares an incredible 8%.
We are also getting a big meltdown on the oil patch. Integrated oil giant Chevron (NYSE: CVX) you are buying a smaller producer Noble energy (NASDAQ: NBL) in a deal valued at $ 13 billion. This is one of the first big deals since oil demand and prices collapsed earlier this year, and offers evidence that executives still see value in the oil patch.
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Vaccine prospects are another opportunity in the market arm
The AstraZeneca vaccine candidate has become one of the leaders in the race to demonstrate efficacy and safety. According to the medical journal The lancet, an early-stage trial in just under 1,100 patients was very positive, with no serious adverse events (indicating risky side effects) and encouraging signs of antibodies indicating a probable immune response to SARS-CoV-2 (the virus that cause COVID-19)
Phase 3 trials have started in three countries and are expected to start soon in the US, bringing the potential vaccine closer to what is expected to be approved. That said, an emergency use authorization would be needed to bring any of the vaccines to market in clinical trials before the end of next year. Testing the drugs in full trials takes several years to measure possible long-term effects, so even a short-term solution would carry its own risks.
Amazon update is moving the market
Easily the biggest event driving the market today was a Goldman Sachs analyst who raised his Amazon stock price target by 27% to an incredible $ 3,800 per share. Analyst Heath Terry is not the first close follower of the mega-cap tech giant to raise its target price. Analysts at MKM Partners and Jefferies They have also moved their Amazon stock price targets above $ 3,350.
Mega-caps lead index rises when most stocks fell
Joining Amazon’s big leap today were members of the trillion dollar club. Apple, Microsoftand Alphabet. Apple shares gained 2.1%, while Microsoft (also with analyst updates) and Alphabet gained 4.3% and 3.1%, respectively. Other mega-cap stocks earning today include Facebook (up to 1.4%), Visa (up to 1.7%), and MasterCard (up to 2.6%).
Taken together, these mega-cap stocks earned enough to offset the trajectory of most of the S&P 500. Fewer than 200 of the stocks in the S&P 500 Index gained value today.
Does the action on the oil patch set the stage for a recovery?
Chevron’s agreement to acquire Noble Energy is notable for several reasons. First, it is one of the first big deals we’ve seen since oil demand and prices began to collapse in late February. Second, and perhaps most notable, is that Chevron is, in essence, buying from Noble for its oil assets, which make up the vast majority of the company’s economic value.
The deal, which is worth $ 13 billion, including Noble Energy’s debt, values the company’s shares at $ 5 billion. Chevron is paying with shares; Noble shareholders will obtain 0.1191 Chevron shares in exchange for their current capital once the deal is approved and closed. Will it be a good value? Well, Chevron’s stock price is down 29% on the year to date, while Noble’s stock is down 59%, even after the 5.6% post-announcement pop. If oil prices can rebound (and stay) above $ 60 a barrel, this acquisition will likely be a bargain for Chevron.
Next: Coca-Cola and United Airlines earnings
Tomorrow will bring us profits from the global beverage giant Coca Cola and fighting United airlines.
Coca-Cola has just announced a quarterly dividend that has increased since last year, but investors are preparing for what could be one of the worst quarters in the company’s history. The company will cut pre-trade earnings on Tuesday, and expectations are for earnings to fall 37% on average, a 28% decrease in sales. Half of the company’s revenue comes from food service, restaurants, entertainment venues and other out-of-home outlets, and it has not replaced all of those sales by people who shop in supermarkets.
United shares fell today, joining most airline stocks on a one-day low. TSA traffic at key travel centers decreased slightly over the past week, raising concerns that the industry has a long way to a full recovery and that not all airlines can survive in their current state. United recently notified 36,000 employees of possible licenses, while Southwest announced that 28% of its employees volunteered to accept purchases or extended license packages. United will report earnings after the close of business on Tuesday, and will hold a conference call with investors on Wednesday.
