The Dow Jones Industrial Average fell 200.94 points, or 0.67%, to close at 30,015.51. The S&P 500 fell 7.66 points, or 0.21%, to end at 3,687.26, and the Nasdaq Composite rose 65.40 points, or 0.51%, to close at 12,807.92. The biggest gainer on the S&P 500 was Paycom Software (ticker: PAYC), up 4.3%.
It was tech stocks, many of which have idiosyncratic growth drivers, leading the way, while most other sectors faltered. The Nasdaq 100 rose 0.2%. Apple (AAPL) stock rose 2.9% on speculation that the company plans to produce electric vehicles. But the S&P 500 Equal Weight Index fell 0.4%, indicating that most large-cap stocks were not in rally mode.
Sure, Congress passed a $900 billion fiscal stimulus package that will provide small business cash that they can use for rehiring when vaccines roll out. But investors have digested that outcome.
Now, a mutation of Covid-19 has been identified in the United Kingdom, which has already spurred travel bans between the U.K. and Europe. Scientists, according to The Wall Street Journal, say the vaccines should work against the mutation, but investors are currently taking a step back and exhibiting some risk aversion. â€œSome of the mutations weâ€™re seeing in the U.K.â€”thereâ€™s some digestion around what that means,â€ Matt Stucky, portfolio manager at Northwestern Mutual Wealth Management Company, told Barronâ€™s. The vaccine news relating to the mutation is a major positive, but â€œitâ€™s not normal for markets to go up unchecked for a long period of time,â€ Stucky said.
Indeed, the mutations are bumping up against a hot market; about 83% of S&P 500 stocks were trading above their 50-day moving averages, according to research from Canaccord Genuity strategists. Thatâ€™s up from 76% last week, when strategists were calling the market overbought. â€œWe continue to believe the market is set up for a period of consolidation/correction given the euphoric sentiment and overbought condition,â€ Tony Dwyer, chief market strategist at Canaccord Genuity, wrote in a note. Already, since Dec. 4, stocks have taken a bit of a time out, with the S&P 500 down about 0.4% since then.
One bright spot in stocks: home builders. With existing-home sales for November coming in at 6.69 million, beating estimates of 6.64 million, home-construction stocks rose. The result was lower than the October reading of 6.86 million. Lennar (LEN) rose 1%. KB Home (KBH) rose 1.5%. Pressured interest rates werenâ€™t hurting, with the 10-year Treasury yield down to 0.92%. Mortgage rates are also historically low, which spurs housing demand.
Dwyer says to buy any dip in the broader market.
Write to Jacob Sonenshine at email@example.com