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Market Recap: Monday, May 18

Stocks kicked off the week on a high note, fueled by a trifecta of positive headlines: Moderna’s success with a potential coronavirus vaccine, the Federal Reserve pledging more support for the recovery, and more states reopening their economies.

Video Transcript

JEN ROGERS: Welcome back to "The Final Round" on Yahoo Finance. We are heading to the closing bell, and we have a big rally on our hands right now. Check it out, the S&P and the Dow up more than 3%, NASDAQ up 2 and 1/2%, and the Russell, the small caps are up more than 6%.

[BELL RINGING]

[GAVEL]

Pretty big day on Wall Street today. All 11 sectors are higher. A lot of the names and sectors that have fallen out of favor recently making big moves here. We have energy up 8 and 1/2%, consumer discretionary is up some 4%, industrials up nearly 7%. A lot of the doves of the recent months, United Airlines, the biggest mover right now in the S&P, is up some 20%. Expedia, another travel name, up 20%. Norwegian Cruise Lines up almost 20% as well.

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So how did this all come to be? Well, on Sunday, we had chair Jay Powell speaking to "60 Minutes." People interpreted his comments as pretty positive, saying that we are not out of ammunition for a long shot. He also said, though, that it's going to take a while for the economy to recover from this and that that might not happen. It might have to await the arrival of a vaccine.

And then as if on cue, we got news from Moderna today, good data out of testing for a vaccine. I want to bring in my co-host, Myles Udland. So Myles, we talk about this being a public health crisis at its heart. And this is about trying to find a solution to coronavirus, whether it's a treatment that works or whether it's a vaccine that works.

Of course, it's early data here, but if this Moderna news turns out to be something that can be scaled and can work, is the market-- I mean, is it already just-- have we already gone there? We're pricing in, like, the V shape on the Moderna news?

MYLES UDLAND I think what the market is pricing in is that the public health crisis isn't going to get worse. So I don't know if that means for the duration of the summer. I don't know if that means forever, but I think what the market is looking at is a lot of states reopening and, you know, case counts maybe moderating to slightly higher in some of those states.

But it's not like just because people were able-- and of course, we don't know yet, right? We're going to need a couple of weeks here. But it seems, to some extent, like, just because people were able to go out in, let's say, Georgia, a state that had a couple of real hotspots, you know, back in March, that we're not seeing new hotspots develop. I think the market is interpreting that as a positive sign that reopenings are going well.

And the vaccine news is basically affirming that not only are things going well, they may well improve. There may well be a quicker fix to a hotspot should emerge by the end of the year, right? Because a vaccine that can come to market at the end of this year, it might only have a couple million doses, but a couple million doses is going to be enough to get it in the hands of folks who need it.

And, you know, not every-- we're not all going to line up outside a clinic and get a vaccine in January, but people who really need it, if one is available, will have access to that to some extent. That's what I think the market is reacting to.

And I think, you know, like we said at the top of the 3 o'clock, too, Jen, there's clearly a lot of investors who were flatfooted coming into the news flow, like we saw in the last 36 hours or so. There is a lot of skepticism I think founded in what's happening in the real economy about this rally, but positioning and liquidity as Jared Blikre has told us many times, that matters as much as anything else. And clearly, that moved against a lot of people very, very quickly, you know, right at the open last night and all the way through the session today.

JEN ROGERS: And it really extended Friday's rally, which came after another we had the jobs numbers on Thursday. We had the retail sales numbers on Friday. Andy Serwer, we've been talking so much about what's been happening in the economy overall.

And we still get that data out. I mean, the University of Michigan today, we had a survey from them, or a research report, saying that they see over 40% of the job losses that we've had as permanent, that those people aren't going back to work. That seems very ugly. Yet, is this-- like, the vaccine, can it just be a silver bullet here for the market?

ANDY SERWER: Yeah, there's more bad news beyond that even, Jen. I mean, Uber said they're laying off 3,000 people and closing down 45 offices, Softbank post to set a $9 billion loss. But you know, today was the day that Moderna, MRNA, took the market up 20%. And that stock was up 20%. The market's up about 4%. Best day since early April.

And I was looking at sort of this spectrum of gains today, and it was really sort of, like, reflective of where things went down and bouncing back. Because, like, a pure beta day-- so you mentioned the airlines up 20%, the dogs, and then a couple of fear stocks that were up half that much about, which were Disney and Ford, you know, they weren't down as much.

But you know, it's like, oh, you know, actually, they're going to start making movies again. And Ford opened up today. That's some more positive news. The vaccine news coming out of Moderna, just to be crystal clear, was kind of baby steps. But, you know, people are looking for things to sort of form an investing thesis around.

And you know, is it a V-shaped-- or at least, it's going up. It's not an L shape. And that's the real fear. It's like anything that doesn't speak to the L is something that people want to hang on to. And you know-- and one could use some hope as well.

JEN ROGERS: Well, later in the show, we're going to get more details from Anjalee Khemlani on exactly some of the details around Moderna. I will note, Andy, to your point about this little kind of mini rotation, today, the market's up huge. You said movies are going to come back. Netflix is down. Netflix did not take part in this early. Campbell's Soup, remember that trade?

ANDY SERWER: No.

JEN ROGERS: Campbel''s Soup not taking part today, so we're having this mini rotation out of some of our stay-at-home names.