People walk by the New York Stock Exchange.
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The Dow Jones Industrial average was set to build on its big Monday rally, while big technology stocks were set to decline again as positive vaccine news sparks a market rotation out of names that thrived during the pandemic into stocks linked to an economic recovery.
Futures for the Dow rose 170 points or 0.6%. S&P 500 futures were off by 0.3% and futures tracking the tech heavy Nasdaq-100 index fell 1.9% amid the ongoing investor rotation.
Monday’s gains drove the Dow and the S&P 500 to new intraday record highs. The 30-stock average closed more than 800 points higher, posting its biggest one-day gain since June 5. It surged more than 1,600 points at one point before the weakness in the tech sector put pressure on the broader market. The S&P 500 gained 1.2%.
While cyclical stocks led the market advance on Monday, the tech-heavy Nasdaq Composite fell 1.5% as investors dumped some of the popular stay-at-home plays such as Amazon, Zoom Video and Netflix. The Nasdaq finished Monday’s session near its session low.
Amazon shares were down another 2% in premarket trading Tuesday after falling 5% on Monday. Zoom dropped 17% on Monday and fell another 2% in premarket trading. Netflix was down another 1% after dropping 8% Monday.
U.S. pharmaceutical giant Pfizer and German biotech firm BioNTech announced Monday their coronavirus vaccine was more than 90% effective in preventing Covid-19. The news sent travel stocks soaring as the’ recovery of these companies depends on a successful economic reopening. American Airlines, Delta and United all jumped more than 15%, while Carnival, Norwegian and Royal Caribbean surged more than 25% each.
United was up another 2% in premarket trading Tuesday. Carnival was up another 6%.
“The strong results from the Pfizer vaccine were better than most expected and means we could be opening back up sooner than expected,” said Ryan Detrick, chief market strategist at LPL Financial, “Coupled with an economy that continues to surprise to the upside and the stock market is now pricing in the prospects of a much better economy in ’21.”
“The ‘stay at home’ trade, which has led the market higher for most of this year, may be falling out of favor,” said Lindsey Bell, chief investment strategist at Ally Invest. “There’s still a good long-term case for tech, but it may not outpace the rest of the market like it has since March.”
Pfizer’s big vaccine news came as the U.S. topped 10 million cases of Covid-19, a bleak milestone just 10 days after reaching the 9 million mark amid a record surge in daily infections. Many on Wall Street believe a viable vaccine would be crucial for the economy on its road to a full recovery.
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