Updated at 4:35 p.m. ET
Euphoria broke out Monday on Wall Street after promising news of a vaccine trial provided a major dose of hope for the global economy.
The powerful rally was sparked after Pfizer and its partner BioNTech said the experimental COVID-19 vaccine was more than 90% effective.
The Dow Jones Industrial Average soared to record highs soon after the open, though it gave up a chunk of gains to finish up 835 points, or nearly 3%.
The Dow had previously hit its record high in February before the pandemic sent stocks sharply lower in March.
The S&P 500 ended up 1.6% after also hitting a record high earlier.
The prospect of a vaccine holds the promise of unlocking major parts of the global economy that have been mostly shut down since March, including restaurants, hotels and movie theaters.
The pandemic has led to millions of layoffs and business closures around the world, bringing the global economy to a grinding halt. Recently, cases of the virus have surged again in Europe and the United States, forcing government officials to reimpose lockdowns.
"Even as rising case numbers have triggered modest news restrictions in the U.S. and Europe, the base case remains that vaccines and improved treatment will bring the pandemic under control enough to allow economic activity to recover during the first half of next year," said Christopher Smart, chief global strategist at Barings Investment Institute.
Airlines and travel-related companies, which have been slammed by the pandemic, rose sharply. United Airlines was up by 19%, while Delta Air Lines was up 17%. Carnival was up 51%.
Other sectors that would directly benefit from improving business activity, such as banks, also gained. Wells Fargo was up 11%.
However, tech shares that soared when the pandemic left people at home binging on videos or shopping online sharply reversed course Monday. Netflix lost 8.6%, while Amazon was down 5%. Zoom, which millions of at-home office workers have used, slumped 17%.
Markets were already expected to open higher Monday after former Vice President Joe Biden was elected president over the weekend.
Stocks have been trading higher for days, with the S&P 500 surging 7.3% last week.
Biden's election, together with the likelihood that the Senate will remain in GOP control, could mean a new era of divided government, something the market has traditionally liked.
The final makeup of the Senate hinges on two Georgia runoffs scheduled for January.
Glenn Hubbard, a former top adviser to President George W Bush, said Biden's election increases the odds that Congress and the White House can agree on another relief bill, though it would make items on Democrats' wish list harder to achieve.
Democrats campaigned on issues such as higher taxes for the wealthy and corporations, which are unpopular with many Republicans.
"A divided government would still yield some additional fiscal measures, maybe not as much as an all-Democratic government," Hubbard said. "And might take off the table some significant tax increases."
DAVID GREENE, HOST:
Stocks are hitting record highs this morning. This follows Pfizer's announcement that it has had big success with a COVID-19 vaccine. The Dow rose more than 1,500 points right after the market opened, and the other major indexes are up as well. We have NPR's Jim Zarroli with us. Jim, good morning.
JIM ZARROLI, BYLINE: Good morning, David.
GREENE: So what are you seeing? And what's driving the market so high?
ZARROLI: Well, this is really good news for the economy. I mean, it's a potential sea change. You know, the - as you know, the pandemic led to a global shutdown in the economy with lots of businesses closing, lots of - millions of people, tens of millions of people laid off really all over the world. The economy just ground to a halt, especially, you know, travel companies, airlines, cruise ships. They were just devastated. If this vaccine proves to be as successful as it appears right now, you know, maybe we will start to see a return to normal at some point, which is why we're seeing stocks just up across the board this morning.
GREENE: What kinds of stocks in particular seem to be benefiting?
ZARROLI: Well, we're seeing airline stocks really surging. United was up 25% right after the market opened. Delta was up more than 20%. Companies like Carnival and Norwegian Cruise Lines, which, you know, nobody takes - took cruises, you know, once the lockdowns took effect. They are up. Also, big banks tend to do better when the economy's in good shape. So you're seeing Goldman Sachs and Citigroup up. And also, energy companies, Exxon, for instance - they benefit from an economy that's growing. They're much higher this morning. But really, almost all stocks are up across the board.
GREENE: Are there exceptions? I mean, are there some stocks that might go down if it looks like a pandemic could at some point soon be coming to an end?
ZARROLI: Yeah. That - and this is kind of funny. The ones that are down or not up as much are companies like Netflix and Peloton, eBay. These are companies that have actually benefited from the lockdowns, you know? When there's a lockdown, people watch a lot of Netflix 'cause they can't go out. So - you know, they can't go to the gym, so they use Peloton. So if this vaccine is as promising as it looks, people aren't going to do that as much. And so you're seeing Netflix stock down, Peloton; eBay is down, too.
GREENE: I mean, the other thing, obviously, we saw over the weekend, which was pretty significant news, is the election called and Joe Biden gives a victory speech. And we are now calling him president-elect. Has that had a factor in what we're seeing this morning as well?
ZARROLI: Yeah, I think so. The market really soared last week, and it was up later in the week when it became pretty clear that Biden was going to be the winner. The Democrats didn't do as well as they hoped. And it looks like the Senate is going to remain in Republican control depending on the outcome of those two runoff elections in Georgia. Unless the Dems - Democrats can win those races, we are going to be headed for a period of divided government - you know, a Democratic White House in a Republican-controlled Senate. And it's kind of conventional wisdom on Wall Street - the market has usually done pretty well under divided government.
GREENE: And I guess the other big question - I mean, when we've talked about stocks and the markets, we've talked about a stimulus bill and whether we might see one coming from Congress. Is - do you feel like there's any clarity? And are we seeing the markets respond?
ZARROLI: Yeah, there's - I think there's a broad consensus among economists that we need another stimulus bill. The economy was really weakened by the pandemic, as we said. You know, this vaccine news today is still preliminary, and it could be months before we know what the impact is going to be. So, you know, we need a stimulus bill. And the hope is President Biden and Congress will be able to get one.
GREENE: NPR's Jim Zarroli.
Jim, thanks as always.
ZARROLI: You're welcome. Transcript provided by NPR, Copyright NPR.