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What a COVID-19 vaccine would mean for the market, according to GS

Yahoo Finance’s Brian Sozzi, Myles Udland, and Julie Hyman discuss the timeline for a COVID-19 vaccine.

Video Transcript

MYLES UDLAND: But, Brian Sozzi, let's turn our attention back to ancient history. That'd be about 6:30 this morning looking through the weekend's dump of research notes that always come in on Monday mornings. And I know that the team over at Goldman Sachs writing about how crucial a vaccine could be for the future of the market. Of course, I guess the answer is here.

BRIAN SOZZI: Yeah, Myles. Far be it for me to pour cold water on this rip-your-face-off rally. But Goldman does note in a new research note, which should be noted, that came before news on Pfizer that you have to get this vaccine distributed. And if this vaccine is not distributed in the first quarter of 2021, Goldman thinks the S&P 500 can drop 11.4%.

The Russell 2000 small cap's down 17.2%. The NASDAQ could fall 9-- 9.3%. And really, It's great to have this news. You see PE multiples in-- inflated.

But this shot has to get into people's arms. And if it doesn't, you're still not going to take a cruise. You're not going to a AMC movie theater.

MYLES UDLAND: You know, Sozzi, I think it's interesting. On the back of that note, which-- I mean, I wouldn't call it consensus, but it's certainly something a lot of shops have written about, which is the risk to the downside here. It's interesting to see how much enthusiasm then there is on the upside.

I mean, it answers the question, was a positive vaccine priced in? The answer's clearly no. But it's-- it's interesting that it's no considering how many teams, you know, like Goldman, among others, were writing about the negative impacts if there had been [? a delay. ?]

BRIAN SOZZI: Yeah. I think this notion that the vaccine of any kind is priced in the market is getting very much shot down today. I've seen some firms say it's 50% priced in. But then what moves we're seeing in the markets today suggests it's just not the case.

MYLES UDLAND: Yeah. A lot of-- a lot of folks off sides there. And [? to ?] think, again, the travel, financials, and just pretty much everything that was unloved over the last couple of months getting a huge bid today. It'll be very interesting to see how that evolves over the next six hours of trading here on Wall Street.