It has been more than eight months since the first lockdown in Europe due to COVID – 19. Since then, the Stock Market dived to historic lows and in less than three months recovered hitting all-time highs, more than 100 companies have gone bankrupt and countless others are struggling to stay afloat and survive, central banks and governments around the world have injected billions and billions in the economy, and, worst of all, hundreds of thousands of people lost their lives and jobs. The battle with COVID – 19 has been a fierce and brutal one. Medical staff working extreme hours and most importantly risking their lives on the frontline of this battle. On the 9th of November though, Pfizer finally gave the world a glimpse of hope that everything could soon be over, and life could be back to normal earlier than we expected, by confirming that their COVID vaccine is 90% effective at stage three. Only days later Moderna on their side stated that their vaccine is 94% effective.
The Market´s Reaction:
As expected, the stock market rallied more than 2% with the S&P 500 and Dow Jones rising 2.18% and 3.38% respectively on the news of the Pfizer vaccine. On the other hand, the Nasdaq 100 Index which is dominated by technology companies fell almost 2%. This could be explained by the expectation that more and more professionals would return to their office and that working from home is going to decline, thus less technological equipment for home offices will be needed.
What to Expect:
Airline, Hotel and Cruise Stocks:
The travel industry, including airlines, hotels and cruises, has been one of the most severely affected ones. Most airline companies plunged more than 30% in value with Delta Airlines, American Airlines, Boeing and Norwegian Air Shuttle tumbling down 63%, 66%, 70% and 98% respectively. While most of the airlines got emergency funding from their respective governments a few were not as lucky and went bankrupt. As the vaccine becomes available, things are slowly going to start to go back to normal with no more social distancing, no more restrictions and most probably no more masks. With people not having been able to travel neither for the summer nor for the Christmas holidays and having been staying home for more than eight months now, there is a very high chance that the moment it becomes safe to fly again with no restrictions, people are going to make sure they make up for the lost summer. Hotels are going to get filled up and cruise ships are going to sail once again. If a vaccine becomes widely available by next year, stocks such as Norwegian Cruise Line, Carnival Corporation, American Airlines, Marriott Hotel and Hilton, could potentially increase significantly in value.
Working from Home Stocks:
As it already happened to some extent after the news of a successful vaccine came out, companies which saw a heavy increase in business because of lockdown could now potentially be expected to decline. Stocks such as Zoom and Hello fresh saw an adventurous rise since the start of the COVID pandemic with Zoom increasing more than 350% in value since February. With more and more companies expected to return their employees into office, a decline in business for Zoom could be expected.
It is important to note that there is still some time until a potential vaccine becomes widely available to everyone. Furthermore, it is expected that the vaccination will happen in several rounds with those being most vulnerable getting access to it first, such as health staff and elderly people. It is important to note that neither Pfizer nor Moderna has gotten an approval from the Food and Drug Administration (FDA). There are still some uncertainties and question marks left, but things are looking a little brighter.