Markets rose after Phizer vaccine gets full approval

Dow climbed 215 (off session highs), advancers over decliners better than 2-1 & NAZ went up 227 to a new record.  The MLP index rose 2+ to the 173s & the REIT index slid back 1+ to the 464 s.  Junk bond funds were flattish & Treasuries inched higher.  Oil zoomed 3+ to the 66s & gold went up 23 to 1804 (more on both below). 

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Dr Scott Gottlieb said he believes the delta variant-driven Covid surge that slammed the American South has reached a top.  “I thought there was an indication the South was peaking, and I think it’s pretty clear right now the South has peaked,” the former Food & Drug Administration commissioner said.  “It doesn’t feel that way because we still have a lot of new infections on a day-over-day basis, and the hospitals still have some very hard weeks ahead,” he acknowledged.  “They’re still going to get maxed out as the infections start to decline.”  His comments  came as the 7-day average of new daily coronavirus infections nationwide in the US stood at roughly 147K, according to Johns Hopkins University data.  That's up 13% from a week ago.  Many Southern states, particularly in areas with lower Covid vaccination rates such as parts of Louisiana & Arkansas, were among the first places in the US to see a sharp rise in coronavirus infections linked to the highly transmissible delta variant.  Signs that the current wave of infection is rolling over in the South may offer insight into the experiences of other US regions that got hit by the delta variant a few weeks later.  “You look at states like Arkansas and Louisiana, you see the cases coming down,” said Gottlieb.  The company’s vaccine received full FDA approval today.  According to Johns Hopkins data, the 7-day average of new daily Covid infections in Arkansas is down 0.5% from a week ago, meaning it is more or less steady.  In Louisiana, new daily coronavirus cases are down 14% from a week ago, based on a 7-day average.

Dr. Scott Gottlieb says delta-fueled Covid surge in the South has peaked 

Treasury Secretary Janet Yellen has reportedly told senior White House advisers that she supports reappointing Jerome Powell as Federal Reserve chair, a key endorsement that likely boosts his odds for a 2nd term.  While Pres Biden has not yet made a decision, uncertainty over the economic impact of the highly contagious delta variant may have triggered more caution about changing leadership at the US central bank.  Powell, a lawyer by training & a former Rep Treasury official, is generally well respected & well-liked among lawmakers in both parties.  Fed chairs – one of the most powerful players in DC, with the ability to dictate the pace of economic growth – are typically nominated for a 2nd term, often to reinforce the central bank's independence from politics.  Yellen's backing amplifies Powell's odds of a 2nd term, given her nearly 2 decades of experience at the Fed, including 4 years leading the central bank.  She also has experience working directly with Powell, who served as a governor at the Fed under her leadership.  Powell's term officially ends in Feb 2022, but the White House has indicated it will make a decision by Labor Day.  Yellen's support comes at a critical time for both the Fed & Powell.  Policymakers are weighing how & when to begin unwinding some of the ultra-easy monetary policies put in place to support the US economy during the pandemic.  It's a difficult needle to thread, with Fed officials attempting to strike a delicate balance between surging inflation & the still-recovering labor market.

Yellen endorses Powell for second Fed term, boosting his reappointment odds

The Food & Drug Administration granted full approval to the Pfizer (PFE) & BioNtech (BNTX) Covid-19 vaccine – becoming the first in the US to win the coveted designation & giving even more businesses, schools & universities greater confidence to adopt vaccine mandates.  Up until now, the mRNA vaccine, which will be marketed as Comirnaty, was on the US market under an emergency use authorization that was granted by the FDA in Dec.  Since then, more than 204M of the PFE shots have been administered, according to data compiled by the Centers for Disease Control & Prevention.  Federal health officials had been under mounting pressure from the scientific community & advocacy groups to fully approve PFE & BNTX's vaccine ever since the drugmakers submitted their application to the agency in early May.  The companies submitted a Biologics License Application, which secures full approval, to the FDA on May7 for patients age 16 & up.  FDA scientists evaluated “hundreds of thousands of pages” of vaccine data from 40K trial participants.  The vaccine was found to be 91% effective in preventing Covid – slightly lower than the 95% efficacy rate trial data showed when the shot was authorized late last year & before the delta variant took hold in the US.  PFE's vaccine met the agency's “high standards for safety, effectiveness, and manufacturing quality,” acting FDA Commissioner Janet Woodcock said.  “While millions of people have already safely received COVID-19 vaccines, we recognize that for some, the FDA approval of a vaccine may now instill additional confidence to get vaccinated.” 

FDA grants full approval to Pfizer-BioNTech’s Covid shot, clearing path to more vaccine mandates

Gold futures settled higher, supported partly by weakness in the $, leading prices back above a key market above $1800 for the first time in over 2 weeks.  Dec gold rose $22 (1.3%) to settle at $1806 an ounce, with the most-active contract marking its highest finish since Aug 5.  Prices on Fri logged a weekly advance of 0.3%, its 2nd in a row.  Moves higher for the yellow metal come ahead of an economic policy symposium where Federal Reserve Chair Jerome Powell on Fri may indicate that the central bank will slow monthly purchases of Treasuries & mortgage-backed securities that had helped to prop up financial markets during the height of pandemic-induced selling in spring of 2020.  Helping lift gold was a softer $, as measured by the ICE U.S. Dollar Index, a gauge of the currency against a basket of a ½-dozen rivals, down 0.3%.  A weaker $ can make assets priced in the currency, like gold, appear more attractive to overseas buyers.  Gold prices briefly pared gains shortly after data today showing US businesses suffered some erosion in growth in Aug for the 3rd month in a row, before heading back up. 

Gold futures settle back above $1,800 as U.S. dollar retreats

Oil futures rose, scoring their biggest daily percentage gain since Mar after ending last week at the lowest price in 3 months on worries the continued spread of the delta variant of the coronavirus that causes COVID-19 would dent demand for crude.  West Texas Intermediate (WTI) crude for Oct rose $3.50 (5.6%) to settle at $65.64 a barrel.  WTI dropped 8.9% last week, taking the US benchmark to a 3-month low.  Oct Brent crude, the global benchmark, climbed $3.5 (5.5%) to $68.75 a barrel, after also falling to its lowest since May last week.  Both benchmarks snapped 7-day losing streaks to log their biggest daily percentage gains since Mar 24.  Concerns around the rapidly spreading delta variant have forced demand expectations lower through the remainder of the year.  The move up for oil came despite today's announcement by the US Energy Dept that it plans to sell up to 20M barrels of crude oil from the nation's Strategic Petroleum Reserve.  Investors also looked ahead to this week's monetary-policy symposium, which was set to be held in Jackson Hole, Wyo, but will take place virtually due to health concerns around the spread of the delta variant.  Fed Chair Jerome Powell is scheduled to speak Fri, with investors looking for clues to when (and if) the central bank will lay out a timetable for the tapering of its monthly asset purchases.

Oil prices score biggest daily gain since March on ‘fire sale’ buying spree

The Dow rose early & remained elevated for the balance of the session.  The PFE vaccine full approval was well received along with better news on the fight with the virus.  The future of the whopper spending bill in Congress is unclear & should get more attention tomorrow.  So far the ugly news from Afghanistan has been largely ignored by the stock market even though the story is not going away anytime soon.

Dow Jones Industrials