William WattsSunny Oh
U.S. stocks closed mixed Tuesday, with the Dow gaining in choppy trade at the expense of the tech-heavy Nasdaq Composite as progress toward a vaccine and treatments for COVID-19 took some froth from some of the biggest pandemic-era winners.
How are stock benchmarks performing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.56% was up 262.95 points, or 0.9%, to end at 29,420.92, near its previous all-time closing high of 29551.42 set in mid-February. The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.08% fell 4.97 points, or 0.1%, to finish at 3,545.53, while the Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.59% slipped 159.93 p, cints, or 1.4%, to close at 11,553.86. The small-cap Russell 2000 /zigman2/quotes/210598147/delayed RUT 0.00% , meanwhile, rose 1.8%.
On Monday , the Dow rose 834.57 points, or 3%, to finish at 29,157.97, booking its best one-day percentage gain since June 5. The S&P 500 added 41.06 points, or 1.2%, closing at 3,550.50. The Nasdaq Composite flipped negative in afternoon trade, ending with a 181.45-point loss, down 1.5%, at 11,713.78, leaving it 2.8% below its Sept. 2 closing record.
Concerns that the rally went too far and too fast weighed on investors Tuesday, amid rising cases of COVID-19 and lingering questions around the transition to a new U.S. administration after last week’s elections.
But the rotation toward value stocks, sensitive to the economy’s performance, away from shares of fast-expanding companies that tend to thrive in times of sluggish economic growth, was still in play.
Analysts said a monumental shift in stock-market positioning could be at hand, if more remedies for COVID-19 and clarity around the U.S. presidential election forces investors to reassess their portfolios.
“Markets are currently going through a rebasing sparked by yesterday’s vaccine news –– and that could certainly last days. The action is most apparent as tech continues to come for sale while early cyclicals and value outperform,” said Yousef Abbasi, global market strategist at StoneX, in a Tuesday note.
Late Monday, Eli Lilly & Co.’s /zigman2/quotes/200106384/composite LLY -2.22% COVID-19 monoclonal antibody treatment called bamlanivimab was approved for emergency use by the U.S. Food and Drug Administration. Eli Lilly shares were up more than 3%.
That development came hours after Pfizer Inc. /zigman2/quotes/202877789/composite PFE -1.06% and BioNTech /zigman2/quotes/214419716/composite BNTX -3.44% on Monday said their vaccine candidate proved 90% effective in a Phase 3 clinical trial . Pfizer’s partner BioNTech on Tuesday said that it planned to supply globally 50 million doses of its two-shot vaccine in 2020 and 1.3 billion in 2021.
“The welcome news on the Pfizer-BioNTech vaccine strengthens confidence that effective vaccines will be deployed in 2021 boosting both demand and effective supply in the global economy,” wrote analysts Krishna Guha and Ernie Tedeschi from Evercore ISI in a Tuesday note.
Advances in treatments and vaccines have prompted a rotation out of the large capitalization stocks that were viewed as more resilient during a pandemic in favor of those smaller-capitalization and value-oriented, cyclical stocks that have been left behind since the virus took hold in earnest back in March.
Indeed, the Russell 2000 index on Monday /zigman2/quotes/210598147/delayed RUT 0.00% saw its biggest one-day outperformance, of 5.23 percentage points, against the Nasdaq Composite performance on record, dating back to 1986, according to Dow Jones Market Data. Moreover, the Russell 2000 Value Index /zigman2/quotes/210598132/delayed XX:RUJ 0.00% closed Monday’s session up 6.85% while its growth counterpart /zigman2/quotes/210598133/delayed XX:RUO 0.00% saw a modest 0.9% gain.
Some on Wall Street worry that yesterday’s rally, however, may have been overdone, with cases of COVID-19 still accelerating in the U.S.
The global tally for confirmed cases of the coronavirus that causes COVID-19 climbed to 50.9 million on Tuesday, according to data aggregated by Johns Hopkins University , while the death toll rose to 1.3 million. The U.S. has the highest case tally in the world at 10.1 million and highest death toll at 238,251 or about a fifth of the global totals. The U.S. reported a record 142,000 cases on Monday, the fifth straight day with a tally over 100,000.
Also, although the market has mostly taken on a bullish tone following Joe Biden being projected the winner of the 2020 U.S. presidential election by a number of news organizations, analysts caution investors that the market could still encounter volatility related to the public health crisis, the transition to a Biden administration, or plans for further monetary or fiscal stimulus to combat the economic harm from the pandemic.