US equities fluctuated on Tuesday as momentum fizzled out and investors pivoted from growth favorites to small-cap and cyclical stocks.
Pfizer’s encouraging vaccine update, which fueled a massive stock surge on Monday, continued to drive a shift out of expensive tech stocks and into plays more likely to outperform in an economic reopening. The tech-heavy Nasdaq composite slumped while Dow Jones industrial average and the small-cap-focused Russell 2000 gained. Popular stay-at-home plays including Netflix, Zoom, and Amazon continued to fall as investors bet on near-term vaccine distribution.
“With a viable vaccine apparently on the horizon, it may be time to take a second look at your portfolio,” Lindsey Bell, chief investment strategist for Ally Invest, said. “Stocks that could benefit from a return to normal life – or the ‘reopening trade’ – could be worth watching over the coming weeks.”
Here’s where US indexes stood shortly after the 9:30 a.m. ET open on Tuesday:
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The turbulent open comes after the Dow and S&P 500 leaped to record intraday highs on Monday. Pfizer’s update lifted investors’ risk appetites and kicked off the week’s rotation to cyclical names. Reopening trades such as airlines, cruises, and hotels gained. Gold tumbled the most in three months as investors ditched safe-haven assets.
Pfizer and BioNTech announced Monday that their experimental coronavirus vaccine was more than 90% effective at preventing COVID-19 in trial patients. The companies now plan to apply for emergency-use authorization with the US Food and Drug Administration to expedite the rollout of their vaccine. The news marks a key breakthrough in the race to find a viable vaccine and spurred hope on Wall Street that the pandemic may be contained sooner than previously expected.
Whether it can arrive soon enough to avoid additional economic damage is a different story. The US reached 10 million COVID-19 cases on Monday as infection rates continued to spike across the country. The Federal Reserve warned in a Monday report that an inability to contain the virus could tank asset prices across risk markets.
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Spot gold climbed as much as 1.5% to an intraday high of $1,890.53 per ounce. The US dollar wavered and Treasury yields ticked higher.
Bitcoin traded just below $15,300 after failing to break above $16,000 in its prolonged rally. The cryptocurrency’s recent momentum has mostly stalled after trading above the $15,000 level.
Oil prices continued to climb, retaking their $40-per-barrel support level. West Texas Intermediate crude gained as much as 1.8%, to $41.02 per barrel. Brent crude, oil’s international benchmark, jumped 2.1%, to $43.28 per barrel, at intraday highs.
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