Stocks and index ETFs are mixed to lower on Tuesday, as Big Tech gets hit by a market rotation from shares that thrived during the pandemic into stocks deemed to benefit from economic recovery, after ebullience over a potential vaccine on Monday.
The S&P 500 lost 0.9% Tuesday, after notching fresh all-time highs on Monday, before closing significantly off those levels. Meanwhile, the Nasdaq Composite shed 2.3%, continuing its decline from Monday. The Dow Jones Industrial Average advanced slightly the flatline after gaining as much as 200 points earlier in the session.
The major stock index ETFs are mixed on Tuesday along with their underlying benchmarks, with the SPDR Dow Jones Industrial Average ETF (DIA) struggling to stay positive after a huge spike on Monday while the SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) are broadly lower into the late morning session. The iShares Core S&P 500 ETF (IVV) is losing ground Tuesday as well as tech shares decline.
“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.”
Meanwhile, stocks on the receiving end of an economic recovery, like energy and aerospace, advanced on Tuesday. Chevron and Exxon Mobil gained over 1%, while Boeing added 4.3%. The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) is up slightly amid the moves.
Both the Dow and S&P 500 notched intraday record highs on Monday before closing substantially lower as the Nasdaq stocks weighed on the broader market.
The surge in stocks Monday was propelled by U.S. pharmaceutical behemoth Pfizer and German biotech firm BioNTech promulgating that their coronavirus vaccine was more than 90% effective in preventing the coronavirus. The U.S. recently hit over 10 million cases of the infection.
“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.”
For more market trends, visit ETF Trends.