(Reuters) – The S&P 500 and the Nasdaq fell on Tuesday as excitement over signs of a first successful late-stage COVID-19 vaccine trial faded, while investors continued to pull money out of some Big Tech companies that have benefited most from the pandemic.The U.S. flag covers the front facade of the New York Stock Exchange (NYSE) in New York City, New York, U.S., November 9, 2020. REUTERS/Brendan McDermid
Amazon.com Inc AMZN.O, Facebook Inc FB.O and Microsoft Corp MSFT.O, which have boomed during this year’s work-from-home shift and powered Wall Street to new highs, extended Monday’s losses and pulled the tech-heavy Nasdaq down about 1.3%.
The tech .SPLRCT, communication services .SPLRCL and consumer discretionary indexes .SPLRCD dropped sharply as investors moved to sectors expected to benefit from a full reopening of the economy, such as energy .SPNY, industrials .SPLRCI and materials .SPLRCM.
“We are seeing a rotation away from growth areas, in particular tech and communication services, mainly because investors want to gravitate more toward the groups that have been underperformers until now,” said Sam Stovall, chief investment strategist at CFRA Research.
Value-linked stocks .IVX, which tend to outperform coming out of a recession, added 1%, while growth stocks .IGX fell 0.8%.
(Graphic: 5-yr performance gap between growth and value stocks – )
The main U.S. indexes hit new peaks on Monday as encouraging data from a late-stage COVID-19 vaccine trial spurred bets of a swift economic recovery next year. Democrat Joe Biden’s projected victory in the U.S. presidential election also added to the market cheer.
“Although great news, it’s just a plan and we need to see some practical things around it like how (the vaccine) is going to roll out, who’s going to get it,” said JJ Kinahan, chief market strategist, TD Ameritrade in Chicago.
Biden hailed the progress on the vaccine, but urged caution saying it would be “many more months” before widespread vaccination is available. Meanwhile, daily new U.S. cases topped 100,000 for the sixth straight day.
The apparent breakthrough in a coronavirus vaccine weakens the case for another large U.S. fiscal stimulus bill, but relief is still needed for struggling businesses, investors said.
Senate Majority Leader Mitch McConnell last week argued for a smaller coronavirus stimulus package after data pointed to a drop in U.S. unemployment rate in October. At 12:40 p.m. ET the S&P 500 .SPX lost 6.89 points or 0.19% to 3,543.61 and the Nasdaq Composite .IXIC lost 121.85 points or 1.04% to 11,591.93. The Dow Jones Industrial Average .DJI rose 158.46 points or 0.55% to 29,316.43.
Amgen Inc AMGN.O gained 3.6% after its asthma drug, being developed in collaboration with AstraZeneca AZN.L, met the main goal of a late-stage study.
Ulta Beauty Inc ULTA.O topped gainers on the S&P 500, climbing 7.7% after the cosmetics store chain signed a long-term deal with Target Corp TGT.N to open its own stores at the big box retailer’s locations. Target gained about 2%.
Apple Inc AAPL.O edged higher ahead of an event where it is expected to unveil new Mac computers using its own in-house processor chips.
Advancing issues outnumbered decliners for a 1.8-to-1 ratio on the NYSE and a 1.5-to-1 ratio on the Nasdaq.
The S&P index recorded 10 new 52-week highs and no new low, while the Nasdaq recorded 65 new highs and 20 new lows.
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