S&P 500 Makes Strong Start to October as Merck Covid Pill Lifts Sentiment By Investing.com

S&P 500 Makes Strong Start to October as Merck Covid Pill Lifts Sentiment By Investing.com

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By Yasin Ebrahim

Investing.com – The S&P 500 rose sharply Friday, as positive results from Merck’s Covid-19 pill stoked investor optimism and triggered a sea of green on Wall Street following a sloppy September.

The rose 1.1%, the gained 1.4%, or 482 points, the Nasdaq was up 0.8%.

Merck & Company Inc (NYSE: ) reported that its experimental Covid-19 pills cut the risk of death and hospitalization by 50% in a study, sending its share price more than 8% higher.

The positive Covid-19 treatment news stoked investor optimism about the recovery amid an ongoing drag from the impact of the Delta variant.

Cyclical stocks including materials and energy took the lead, with the latter helped by expectations that energy prices will continue to climb to as high as $100 a barrel.

“If all these factors come together, oil prices could spike and lead to a second round of inflationary pressures around the world,” Bank of American said in a note.

Exxon Mobil (NYSE: ) was up nearly 4% after raising its forecast on third-quarter earnings, citing higher oil and gas prices. The oil major said higher energy prices could boost earnings by as much as $1.5 billion.

Bets on reopening stocks – those that benefit from easing pandemic restrictions – renewed, with cruise and airlines companies leading the way.

United Airlines Holdings (NASDAQ: ), American Airlines Group (NASDAQ:NASDAQ: ), Carnival (NYSE:CCL) and Norwegian Cruise (NYSE:NCLH) were sharply higher.

Big tech, which fell victim to rising interest rates recently, found its footing.

Apple (NASDAQ: ), Facebook (NASDAQ: ) and Alphabet (NASDAQ: ), and Microsoft (NASDAQ: ) ended in the green. Amazon.com (NASDAQ: ) closed lower.

On the economic front, the faster pace of inflation shows little sign of abating, but the consumer, which makes up about two-thirds of the economy, continues to spend.

The Federal Reserve’s preferred inflation measure, the personal consumption expenditures (PCE) price index excluding food and energy, in the 12 months through September.

Consumer spending in July rose by 0.8% month-on-month, from a 0.1% decline in the prior month.

“We remain constructive on consumer spending in the coming quarters. Even as the impulse from fiscal stimulus targeted at households fades, labor market income and a savings cushion should support continued spending,” Morgan Stanley (NYSE: ) said.

In Washington, meanwhile, House Speaker Nancy Pelosi was forced to delay a planned vote on the $1 trillion bipartisan infrastructure package amid ongoing wrangling within the Democratic caucus.

The House was hoping to pass the bipartisan infrastructure package and the $3.5 trillion reconciliation bill simultaneously, as part of a two-track strategy. But Sen. Joe Manchin said he would support a reconciliation package worth only $1.5 trillion, well short of the proposed $3.5 trillion.

Looking ahead, investors anticipate another wild week amid several events that could dominate direction in the broader market, including the Federal Reserve’s September meeting minutes, the OPEC meeting, and the monthly jobs report to round out the week.

“Since labor supply issues became apparent this spring, we’ve been eagerly awaiting September payrolls, expecting them to show a sharp acceleration in the pace of hiring,” Jefferies (NYSE: ) said in a note.

Premarket Movers Thursday: Merck, CarMax, Virgin Galactic, Kohl’s

U.S. equity futures on Thursday again moved higher but remain on pace for their worst monthly performance of the year, as investors continue to navigate a series of risks linked to energy markets, China growth and U.S. fiscal policy.

Here are some of the top movers during premarket trading Thursday.

1. Virgin Galactic SPCE | Up 8.4%

Shares of Virgin Galactic (SPCE) - Get Virgin Galactic Report jumped after the top U.S. aviation safety regulator cleared the space tourism company to operate flights again. The FAA completed an inquiry into its July 11 flight.

2. CarMax KMX | Down 8.1%

Shares of CarMax (KMX) - Get CarMax, Inc. Report dropped after the used-car retailer’s fiscal-second-quarter earnings fell 4% and missed estimates. Net income fell to $285.3 million, or $1.72 a share, from $296.7 million, or $1.79 a share, in the year-earlier period. Sales rose to $7.99 billion from $5.37 billion.

Analysts expected earnings of $1.88 a share and sales of $6.91 billion, according to a survey by FactSet.

3. Kohl’s KSS | Down 7.6%

Department-store chain Kohl’s (KSS) - Get Kohl’s Corporation (KSS) Report shares came under pressure after analysts at Bank of America double-downgraded the stock to underperform as persistent supply-chain issues could cut into its revenue. Bank of America has a price target of $48 a share for Kohl’s.

4. Merck MRK | Up 1.1%

Shares of Merck (MRK) - Get Merck & Co., Inc. (MRK) Report edged higher early Thursday after the pharmaceutical company agreed to buy Acceleron Pharma (XLRN) - Get Acceleron Pharma Inc Report for $180 a share. The deal values the rare-drug specialist at around $11.5 billion.

5. Jabil JBL | Up 2.7%

Jabil (JBL) - Get Jabil Inc. Report shares traded higher Thursday after analysts at Stifel upgraded the stock to buy from hold and raised their price target to $68 from $63.

Mizuho Securities Stick to Their Buy Rating for Merck & Company By Investing.com

Mizuho Securities analyst Mara Goldstein maintained a Buy rating on Merck & Company on Thursday, setting a price target of $100, which is approximately 33.17% above the present share price of $75.09.

Goldstein expects Merck & Company to post earnings per share (EPS) of $0.61 for the third quarter of 2021.

The current consensus among 7 TipRanks analysts is for a Moderate Buy rating of shares in Merck & Company, with an average price target of $90.14.

The analysts price targets range from a high of $101 to a low of $80.

In its latest earnings report, released on 06/30/2021, the company reported a quarterly revenue of $11.4 billion and a net profit of $1.7 billion. The company’s market cap is $190.08 billion.

According to TipRanks.com, Mizuho Securities analyst Mara Goldstein is currently ranked with 4 stars on a 0-5 stars ranking scale, with an average return of 14.3% and a 39.57% success rate.

Merck & Co., Inc. develops pharmaceutical and vaccine products. It also offers healthcare solutions and vaccines addressing animal health. The company was founded in 1891 and is headquartered in Kenilworth, NJ.