The Dow Jones average is one of the oldest stock market indicators in the United States. It is one of the first things investors study. The average provides a number based on the stock price of 30 US stocks. It helps them gain a basic understanding of where the market is going. Despite its many flaws, many people still look at the average as an accurate indicator for where the market is trending.
Recently, the Dow Jones average is giving investors a headache. It has been extremely volatile for the past few months. This is because of the Covid-19 pandemic. Since the virus started spreading in February, businesses have not been open. Due to this, the stock price of many companies has been falling. The Dow Jones average has also been very volatile because of this. After a rise of 400 points on Friday, 8 May 2020, the average proceeded to fall for the next 3 days before rising a little.
Dow Jones Rises Sharply
On Monday, 18 May 2020 the Dow average is having its best day in recent times. During the day, the average has been trading at nearly 900 points higher. This is a rise of almost 4% within a trading day. The average opened at 24060.12 points but it is trading at 24628.34 as of 14:50 GMT. The average had closed the previous day at 23679.16 points. Other indices are also up on the day. The S&P 500 is up by 3.3% while the NASDAQ composite is up by 2.7% on the day.
Market Reacts To Positive Coronavirus Vaccine Update
The rise in different indices came as many stocks rallied during the day. The stock prices of many companies are up. This is coming after Moderna Inc. put out a positive report for phase one of their Coronavirus vaccine testing. The market reacted quickly to this, and many stocks rose quickly in pre-market trading. The shares of Modera itself are up by 25% on the day.
The optimism from the news is likely to be short-lived. While the update is certainly positive, it is going to take time before Moderna can actually declare their vaccine as a viable option. The vaccine will have to go at least two more rounds of testing, and then the tests will have to get verification from authorities before they can roll it out. Since the number of cases is still rising, investors should expect the market to drop soon, and continue its recent volatile trend.