The COVID-19 pandemic has created unprecedented uncertainty in the financial markets, and Monday morning's market moves showed the impact that's having on market participants. Investors continue to see wide disparities in the way different stocks are moving, with growth-oriented companies in favor while old-economy cyclical giants have lagged. Just before 11 a.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was down 65 points to 26,607. However, the S&P 500 (SNPINDEX: ^GSPC) rose 9 points to 3,233, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) climbed 115 points to 10,618.
Trying to find a viable vaccine against the coronavirus has become the highest priority among pharmaceutical and biotech companies. That's created a competitive environment in which one company's success can have ripple effects across the sector. Today, AstraZeneca (NYSE: AZN) released its latest trial data on its candidate vaccine. Yet where investors felt the brunt of that news was in shares of Moderna (NASDAQ: MRNA), which fell in part because of the competition and in part because of negative views from stock analysts.
Will AstraZeneca's vaccine win?
Shares of AstraZeneca were down about 2% late Monday morning. The stock had been up as much as 6% earlier in the session, but it's still anyone's guess whether multiple companies will be able to develop vaccines to fight COVID-19.
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AstraZeneca has been working alongside researchers at the U.K.'s Oxford University on an experimental coronavirus vaccine. Since April, researchers have been doing early-stage studies to determine immune response from the vaccine candidate, as well as building a safety profile.
The results so far are encouraging. The treatment creates neutralizing antibodies to help fight the coronavirus, and it also makes the body's own T-cells work more efficiently to try to contain the disease. Despite some minor side effects, researchers are conducting larger trials both in the U.K. and in other countries such as Brazil. They anticipate a U.S. study in the near future.
For AstraZeneca, the stakes are high. Oxford hopes to use the drugmaker's production capacity to make 2 billion doses of the vaccine, and countries around the world have already signed up to take deliveries when they're available.
Is Moderna too expensive?
Elsewhere in the healthcare sector, shares of Moderna dropped 11% Monday morning. AstraZeneca's competition provides a piece of the puzzle explaining the decline, but Wall Street analysts also deserve some of the blame.
Analysts at J.P. Morgan downgraded shares of Moderna from overweight to neutral. To be clear, the analysts haven't changed their views about the biotech company's chances at being the first to develop a viable COVID-19 vaccine. With its mRNA-based technology, Moderna has been able to move forward quickly with clinical trials to try to stay ahead of other companies.
However, what J.P. Morgan finds troubling is the rapid rise in Moderna's stock price. Before today's drop, the shares had risen more than 50% just since the beginning of July and had been up 400% from February levels.
Interestingly, J.P. Morgan kept its stock price target unchanged. At $89 per share, that's above where Moderna now trades. If Moderna can come through to develop a successful vaccine, then there's still room for the biotech stock to claim further gains -- even if those gains might not be as large as they'll be for those who bought shares just a few short months ago.
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