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Nov. 10, 2020, 4:22 p.m. EST

Dow gains 260 points, while Nasdaq slides as vaccine hopes spark rotation away from tech highfliers

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 (DOW:DJIA) 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 (S&P:SPX) fell 4.97 points, or 0.1%, to finish at 3,545.53, while the Nasdaq Composite (NASDAQ:COMP) slipped 159.93 p, cints, or 1.4%, to close at 11,553.86. The small-cap Russell 2000 (USA:RUT) , 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 (NYS:LLY) 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. (NYS:PFE) and BioNTech (NAS:BNTX) 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 (USA:RUT) 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 (USA:XX:RUJ) closed Monday’s session up 6.85% while its growth counterpart (USA:XX:RUO) 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.

Read: Why investors should ‘let dust settle’ after stock market soars on Pfizer vaccine new 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.

“Positive vaccine news raises the question as to how fiscal and monetary policy should and will respond, the Evercore ISI analysts said. “This will be core to the policy debate globally going forward.”

Meanwhile, Republican Senate Majority Leader Mitch McConnell, R-Ky., threw support behind President Donald Trump’s pursuit of legal challenges to the outcome of the presidential race.

There are few if any paths for Trump to hinder Biden from becoming the 46th president of the U.S., but vote counting continues in a number of states, and legal disputes may contribute to concerns about possible snags on the path to the former vice president’s inauguration on Jan. 20.

McConnell, however, has sounded upbeat on prospects for another round of relief spending, even if that may result in a skinnier aid package than Democrats and market participants had hoped for.

In another sign the U.S. labor market is cooling, data showed 5.87 million people were hired in September, down slightly from 5.95 million in August. The number of job openings in September rose to 6.4 million from 6.35 million a month earlier, while job separations, including layoffs, slipped to 4.66 million from 4.69 million.

The yield on the 10-year U.S. Treasury note (XTUP:BX:TMUBMUSD10Y) gained 1.3 basis points to 0.97%. Yields and bond prices move in opposite directions.

The pan-European Stoxx 600 Europe Index (STOXX:XX:SXXH) rose 0.9%, while London’s FTSE 100 (FTSE:UK:UKX) jumped 1.8%.

Oil futures built on the previous session’s vaccine-inspired rally, with the U.S. benchmark (NYM:CL.1)   rising $1.21, or 2.9% to settle at $43.61 per barrel, its highest since Sept. 3. Gold rose , with the December contract (NYM:GC00) gaining $22, or 1.2%, to settle at 1,876.40 an ounce.

The ICE U.S. Dollar Index (IFUS:DXY) , a measure of the currency against a basket of six major rivals, was little changed after a 0.6% rise on Monday.

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