Travel stocks and sector-related exchange traded funds surged on Friday after Merck revealed promising results for its oral COVID-19 drug.
Among the best performing non-leveraged ETFs of Friday, the U.S. Global Jets ETF (NYSEArca: JETS) advanced 5.6%, the AdvisorShares Hotel ETF (BEDZ) increased 4.5%, and the SonicShares Airlines, Hotels, Cruise Lines ETF (NYSE Arca: TRYP) gained 4.0%.
Positive clinical trial results for Merck & Co’s experimental antiviral COVID-19 helped fuel the risk-on mood Friday. Trial data revealed that the company’s pill, molnupiravir, could halve the chances of dying or being hospitalized for those most at risk of contracting severe COVID-19, Reuters reports.
If cleared, the new drug would be the first pill shown to treat the coronavirus. Some analysts even warned that the promise of an oral drug that can be taken at home could change the public perception of risks associated with COVID-19, especially when it comes to vaccines.
“We see modest perceived headwind to vaccine stocks such as MRNA (Moderna) if the market thinks people will be less afraid of COVID-19 and less inclined to get vaccines, if there is a simple pill that can treat COVID-19,” Jefferies analyst Michael Yee said in a client note.
The company said that it will soon ask health officials in the U.S. and around the world to authorize the pill’s use, according to the Associated Press. A decision from the U.S. Food and Drug Administration could come within weeks, and the drug could be quickly distributed if approved.
“This would allow us to treat many more people much more quickly and, we trust, much less expensively,” Dr. William Schaffner, an infectious disease expert at Vanderbilt University who was not involved in the research, told AP.
Southwest Airlines also received an additional boost after JPMorgan upgraded the stock, adding that most of the group was worth buying for a trade, CNBC reports.
“We have seen this rotation back to the so-called reopening plays and the more cyclical areas, which I think makes a lot of sense over the next couple of weeks as we think about the Covid trends improving, with the cases falling from last month’s peak, and the news about the Merck pill appears promising,” Angelo Kourkafas, an investment strategist at Edward Jones, told CNBC.
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