Biotech ETFs Gain Amid Vaccine Optimism | ETF Trends

With a slew of news to start off the month and quarter, biotech equities and ETFs are moving higher on Wednesday with optimism over developments on the coronavirus vaccine front.

The Dow Jones Industrial Average has rallied slightly amid the news, up 0.21%, while the S&P 500 gained 0.63% and the Nasdaq Composite climbed 85%. Stocks finished the quarter strong on Tuesday with a healthy run-up into the close before pulling back in the extended trading session and overnight futures markets.

Stock index ETFs are tracking gains along with the underlying benchmarks, with the SPDR Dow Jones Industrial Average ETF (DIA), the SPDR S&P 500 ETF Trust (SPY), and the Invesco QQQ Trust (QQQ)  trading positive as of noon EST Wednesday.
 A new study of a potential coronavirus vaccine candidate that Pfizer and BioNTech are developing revealed that the drug generated neutralizing antibodies. The results have been released online, but have not been reviewed by a medical journal yet.

“We are encouraged by the clinical data of BNT162b1, one of four mRNA constructs we are evaluating clinically, and for which we have positive, preliminary topline findings,” said Kathrin U. Jansen, head of vaccine research and development at Pfizer, in a release.

The company also said that, if the vaccine achieves regulatory approval, it anticipates it will create up to 100 million doses by year-end and “potentially” more than 1.2 billion by the end of 2021. The news helped Pfizer shares to pop 5.4%, while BioNTech’s U.S.-listed shares climbed 10.1%.

White House health advisor Dr. Anthony Fauci admonished citizens Tuesday that if the outbreak persists at its current rate, daily new cases could surpass 100,000 new infections per day.

“We just see this ongoing push-and-pull between reopening [the economy]and the virus,” said Tom Hainlin, global investment strategist at Ascent Private Capital Management. “We got some positive early-stage vaccine data from Pfizer, but you’ve got Google and Citigroup, among other companies, saying they’re going to slow down our process of getting people back to the office because of this resurgence.”

While there is some speculation as to whether this recent activity is due to a second wave of the coronavirus or simply a spike in the first wave cases, many analysts see this fall as a time for the virus to explode once again.

“The brokerage’s biotechnology analyst Matthew Harrison wrote that his base case scenario projects a ‘second wave’ in the fall with daily new cases summing between 40,000 and 50,000 nationwide,” reports Thomas Franck for CNBC. “Investors often listen to Harrison in greater numbers for his success in predicting the course of the pandemic and government responses.”

A number of states are showing a dramatic surge in coronavirus cases, necessitating closures of bars, and the rollback of reopening plans, spooking investors and driving markets lower, as summer was believed to be a reprieve from the virus due to its supposed intolerance for heat. Adding to the stress is that California, Texas, and Florida – the three largest states – are all enduring dramatic coronavirus cases increases.

“We expect to see some additional lockdowns potentially as early as this summer for certain hot spots, but most likely in the fall when flu season ramps and hospital capacity fall,” said Harrison.

For investors looking to take part in the biotech sector using ETFs, the VanEck Vectors Biotech ETF (BBH), iShares Nasdaq Biotechnology ETF (IBB), and the Virtus LifeSci Biotech Clinical Trials ETF (BBC) are all ETFs to consider.

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