Stocks head for mixed opening after surge fueled by vaccine news
US stocks were set for a mixed opening Tuesday after Pfizer’s coronavirus vaccine breakthrough led investors to reshuffle their portfolios.
Futures contracts tied to the Dow Jones industrial average climbed 192 points, or roughly 0.7 percent, to 29,240 as of 6:57 a.m. following the blue-chip index’s 834-point Monday rally on news that Pfizer’s COVID-19 shot was more than 90 percent effective.
But S&P 500 futures dipped about 0.2 percent while futures linked to the tech-heavy Nasdaq 100 tumbled nearly 1.5 percent amid hopes that the vaccine might soon help the economy return to normal — which led investors to dump shares in tech firms that have benefitted from pandemic lockdowns, such as Zoom and Peloton.
“Bombed out sectors such as aviation, travel, leisure, big oil and yes, our beloved banks, time-warped back to 2019 with giant rallies. Technology, home working and fitness, online shopping and associated logistic companies all retreated,” said Jeffrey Halley, senior market analyst at OANDA.
That “rotation” will likely continue as drugmakers press ahead with their efforts to produce a vaccine for the deadly virus, according to Halley. Pfizer and its German partner, BioNTech, could ask the feds for emergency approval of their shot by the end of the month, and late-stage clinical trials are underway in the US for candidates from Moderna, AstraZeneca and Johnson & Johnson.
But health experts have cautioned that a vaccine won’t be widely available until sometime next year. In the meantime, parts of the world are grappling with a surge in coronavirus infections that led the US to report nearly 120,000 new cases on Monday, according to Johns Hopkins University.
Policymakers could also ease up on their efforts to shore up the pandemic-battered economy if the vaccine does help economic activity restart faster than expected, according to market observers.
“The investment world is now debating whether the rally is sustainable or if it will fade, considering it will take six months for many of us to receive the vaccine (assuming a willingness to take it),” said Stephen Innes, chief global market strategist at Axi.
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