Consumer-durables stocks have sold off on news of vaccine breakthroughs
When pfizer and BioNTech, two pharmaceutical companies, revealed in November that their covid-19 vaccine was over 90% effective, health experts celebrated around the world. Stockmarkets, however, responded with a mere golf clap. The s&p 500, a technology-heavy index of big American firms, rose by just 1.2% that day.
There are at least two plausible explanations for this muted reaction. One is that investors already expected such success. Although markets’ views on vaccine prospects cannot be measured directly, Good Judgment, a consultancy that uses a group of “superforecasters” to make predictions, offers a proxy. In April it began publishing a daily probability that enough vaccines to inoculate 25m Americans will be distributed by March 31st 2021. When Pfizer released its results, the forecasters raised this value from 53% to 88%, showing that the outcome was indeed a surprise. (Pfizer’s own shares also rose by 7.7% on the news.)
That leaves the other probable cause of the markets’ mixed signals: a successful vaccine may not help companies that have benefited from social changes caused by covid-19. In one study testing this theory, Goldman Sachs, a bank, analysed how shares in each industry had responded to shifts in the odds of an early-arriving vaccine. It found that technology companies, whose products have enjoyed faster adoption during lockdowns, lagged behind the market when vaccine prospects improved. Conversely, energy and materials firms rallied the most under such conditions.