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(Updates to close, adds commentary)
By Sinéad Carew
NEW YORK, Nov 10 (Reuters) - The Nasdaq closed lower on
Tuesday as investors sold off technology stocks that benefited
from virus lockdowns and favored the sectors that suffered most
during the pandemic on optimism that a COVID-19 vaccine would
turn around the economy.
The heavyweight technology .SPLRCT consumer discretionary
sectors .SPLRCD and communication services .SPLRCL
languished on Tuesday while investors favored small caps and
economically sensitive energy .SPNY and industrials .SPLRCI
sectors as well as value stocks in consumer staples .SPLRCS .
The main U.S. indexes had hit intraday peaks on Monday after
Pfizer Inc PFE.N said a vaccine it is developing with German
partner BioNTech SE BNTX.O was 90% effective against COVID-19.
"It's the reopening trade. To the extent the economy can
reopen sooner rather than later the stay-at-home stocks won't be
as valuable," said Jim Paulsen, chief investment strategist at
The Leuthold Group in Minneapolis.
The Dow Jones Industrial Average .DJI rose 234.51 points,
or 0.8%, to 29,392.48, the S&P 500 .SPX lost 7.25 points, or
0.20%, to 3,543.25 and the Nasdaq Composite .IXIC dropped
164.62 points, or 1.41%, to 11,549.16.
Amazon.com Inc AMZN.O , Facebook Inc FB.O and Microsoft
MSFT.O , which have boomed during this year's work-from-home
trend and powered Wall Street to new highs, extended Monday's
losses and weighed on the tech-heavy Nasdaq during the session.
After hitting a record in Monday's session, the Philadelphia
Semiconductor Index .SOX underperformed sharply on Tuesday
with Nvidia NVDA.O and Xilinx XLNX.O falling hard.
And the S&P's value stock index .IVX , which tends to
outperform coming out of a recession, was well ahead of the less
economically sensitive growth index .IGX on Tuesday.
"Everybody's coming out of the woodwork saying the same
thing that now is the time to be buying value" and selling
technology said Robert Pavlik, senior portfolio manager at
Dakota Wealth in Fairfield, Connecticut.
"People believe the Pfizer vaccine is going to initiate a
reopening of the economy forcing people back on the road, back
to work and back into the stores," said Pavlik. "There's some
warrant to it but to see this kind of action is extreme."
Trading was also choppy at times as some investors monitored
for election uncertainty after U.S. Secretary of State Mike
Pompeo became the latest Republican to suggest President Donald
Trump would not concede the White House to Democrat Joe Biden.
But Leuthold's Paulsen said most market participants have
been largely ignoring the Trump administration's complaints
about the election outcome because they have not produced any
evidence of problems with vote counts.
President-elect Biden hailed the vaccine progress but
cautioned that 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.
U.S. Health Secretary Alex Azar said on Tuesday that if
Pfizer submits its interim COVID-19 vaccine to health regulators
as quickly as expected, the U.S. government expects to start
vaccinations in December.
A vaccine breakthrough may weaken the case for another large
U.S. fiscal stimulus bill, although some investors say that
relief is still needed for struggling businesses. Senate Majority Leader Mitch McConnell, a Republican, said
on Tuesday he saw no need for a multitrillion-dollar coronavirus
relief bill. {nW1N2CF04Y]
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5-yr performance gap between growth and value stocks https://tmsnrt.rs/3kjdIem
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