The Dow Jones Industrial Average is posting minor gains Tuesday morning as investors continue to celebrate the prospects of a return to pre-pandemic normalcy, and while smaller corporations are among those outperforming the market, overpriced stocks in the S&P 500 and the tech sector are still taking a beating.
Shortly after the open, the Nasdaq was down 1.3% after falling 1.6% on Monday as Pfizer’s promising vaccine results prompted investors to shift focus from growth stocks like stay-at-home favorites Zoom and Netflix to more value-oriented buys in banking and energy.
That movement continued Tuesday morning with the Dow Jones Industrial Average up about 50 points, or 0.2%, while the S&P 500, which counts tech heavyweights such as Netflix and Facebook (down 1% and 3%, respectively) within its ranks, was down 0.6%.
Small-cap stocks, meanwhile, have been a huge beneficiary of Wall Street’s rotation away from tech: The Russell 2000, a broad measure of small-cap performance, was slightly outperforming the market again on Tuesday, adding 1.7%, after turning positive for the year on Monday and jumping 3.7%.
Beyond Meat shares are tanking 22% after the firm surprised investors with a loss and also failed to meet revenue projections; commercial real estate firm Simon Property Group also reported earnings below Wall Street expectations due in part to lower rent prices and missed payments from tenants amid the pandemic.
Shares of Eli Lilly, meanwhile, are up nearly 4% after the drugmaker received emergency clearance from the Food & Drug Administration for its coronavirus antibody drug–adding to promising news on the pharmaceutical front.
European indices were also up Tuesday morning on boosts to industries like auto manufacturing, banking and energy, with the United Kingdom’s FTSE 100 climbing 1.4%, and France’s CAC 40 up 1%.
Though Monday proved bullish for vaccination prospects, experts aren’t entirely convinced the day’s gains and losses will be long-lived. “I suspect the markets, which are already in a bullish mood due to the incoming Biden administration, are overthinking the positive vaccine news,” Nigel Green, the CEO of $12 billion advisory deVere Group, said on Monday. “There’s a long road ahead still,” he adds, noting that investors will have more clarity on the implications of Monday’s announcement by the third week of November, when Pfizer says it plans to submit its vaccine candidate to the FDA for approval. The next months could also be among the worst on the pandemic front, as cases continue to surge right before people are likely to gather for the holidays.
“Investors are still debating the implications of the Pfizer vaccine news and whether the enormous rotation trade witnessed Monday has legs over the coming days and weeks,” Vital Media Knowledge Founder Adam Crisafulli said Tuesday morning. “Most likely it does; investors should be biasing value and cyclical stocks [like those in banking, leisure and tourism] over growth and momentum stocks [such as big tech],” he notes, adding that even the broader S&P 500 is trading based on sky-high multiples based on earnings estimates for 2022 that assume a “fully recovered, vaccinated economy.”
Shares of Amazon are falling nearly 3% after the European Union revealed its antitrust suit against the e-commerce giant, alleging illegal abuse of its dominance in Europe’s online market. Amazon said it disagrees with the findings, CNN reported.