This post was originally published on this site

Stocks were putting in a mixed performance Tuesday, with the Dow advancing in choppy trade while the tech-heavy Nasdaq Composite extended a decline as progress toward a vaccine and treatments for COVID-19 inspired selling of some of the biggest pandemic-era winners.

How are stock benchmarks performing?

The Dow Jones Industrial Average DJIA was up 248.43 points, or 0.9%, at 29,406.40. The S&P 500 SPX, +0.04% rose 3.81 points, or 0.1%, to 3,554.31, while the Nasdaq Composite COMP, -0.61% fell 81.80 points, or 0.7%, to 11,631.99. The small-cap Russell 2000 RUT, +1.84%, meanwhile, was up 1.6%.

On Monday, the Dow rose 834.57 points, or 3%, to finish at 29,157.97, booking its best one-day percentage gain since June 5. The S&P 500 added 41.06 points, or 1.2%, closing at 3,550.50. The Nasdaq Composite flipped negative in afternoon trade, ending with a 181.45-point loss, down 1.5%, at 11,713.78, leaving it 2.8% below its Sept. 2 closing record.

What’s driving the market?

Concerns that the rally went too far and too fast weighed on trade Tuesday, amid rising cases of COVID-19 and lingering questions around the transition to a new U.S. administration after last week’s elections.

But the rotation toward value stocks away from growth stocks was still in play. Analysts said a monumental shift in stock-market positioning could be at hand, if more remedies for COVID-19 and clarity around the U.S. presidential election forces investors to reassess their portfolios.

“Markets are currently going through a rebasing sparked by yesterday’s vaccine news –– and that could certainly last days. The action is most apparent as tech continues to come for sale while early cyclicals and value outperform,” said Yousef Abbasi, global market strategist at StoneX, in a Tuesday note.

Late Monday, Eli Lilly & Co.’s LLY, +3.33% COVID-19 monoclonal antibody treatment called bamlanivimab was approved for emergency use by the U.S. Food and Drug Administration. Eli Lilly shares were up more than 4%.

That development came hours after Pfizer Inc. PFE, -1.29% and BioNTech BNTX, +5.13% on Monday said their vaccine candidate proved 90% effective in a Phase 3 clinical trial. Pfizer’s partner BioNTech on Tuesday said that it planned to supply globally 50 million doses of its two-shot vaccine in 2020 and 1.3 billion in 2021.

“The welcome news on the Pfizer-BioNTech vaccine strengthens confidence that effective vaccines will be deployed in 2021 boosting both demand and effective supply in the global economy,” wrote analysts Krishna Guha and Ernie Tedeschi from Evercore ISI in a Tuesday note.

Advances in treatments and vaccines have prompted a rotation out of the large capitalization stocks that were viewed as more resilient during a pandemic in favor of those smaller-capitalization and value-oriented, cyclical stocks that have been left behind since the virus took hold in earnest back in March.

Indeed, the Russell 2000 index on Monday RUT, +1.84% saw its biggest one-day outperformance, of 5.23 percentage points, against the Nasdaq Composite performance on record, dating back to 1986, according to Dow Jones Market Data. Moreover, the Russell 2000 Value Index RUJ, +2.55% closed Monday’s session up 6.85% while its growth counterpart RUO, +1.17% saw a modest 0.9% gain.

Some on Wall Street worry that yesterday’s rally, however, may have been overdone, with cases of COVID-19 still accelerating in the U.S.

Read: Why investors should ‘let dust settle’ after stock market soars on Pfizer vaccine news

The global tally for confirmed cases of the coronavirus that causes COVID-19 climbed to 50.9 million on Tuesday, according to data aggregated by Johns Hopkins University, while the death toll rose to 1.3 million. The U.S. has the highest case tally in the world at 10.1 million and highest death toll at 238,251 or about a fifth of the global totals. The U.S. reported a record 142,000 cases on Monday, the fifth straight day with a tally over 100,000.

Also, although the market has mostly taken on a bullish tone following Joe Biden being projected the winner of the 2020 U.S. presidential election by a number of news organizations, analysts caution investors that the market could still encounter volatility related to the public health crisis, the transition to a Biden administration, or plans for further monetary or fiscal stimulus to combat the economic harm from the pandemic.

“Positive vaccine news raises the question as to how fiscal and monetary policy should and will respond, the Evercore ISI analysts said. “This will be core to the policy debate globally going forward.”

Meanwhile, Republican Senate Majority Leader Mitch McConnell threw support behind President Donald Trump’s pursuit of legal challenges to the outcome of the presidential race. There are few if any paths for Trump to hinder Biden from becoming the 46th president of the U.S., but vote counting continues in a number of states, and legal disputes may contribute to concerns about possible snags on the path to the former vice president’s inauguration on Jan. 20.

McConnell, however, has sounded upbeat on prospects for another round of relief spending, even if that may result in a skinnier proposal than Democrats and market participants had hoped for.

In another sign the U.S. labor market is cooling, data showed 5.87 million people were hired in September, down slightly from 5.95 million in August. The number of job openings in September rose to 6.4 million from 6.35 million a month earlier, while job separations, including layoffs, slipped to 4.66 million from 4.69 million.

Which stocks are in focus?
  • Square Inc.  SQ, -3.73%  priced a $1 billion convertible bond offering on Tuesday and entered hedging agreements that aim to reduce dilution on conversion. Shares fell more than 4%.
  • Amazon.com Inc. AMZN, -2.47% faces antitrust charges from the European Union over the use of merchant data on its platforms, and the bloc has opened another investigation into the e-commerce company, in the latest move to regulate technology giants in Europe. Shares of the e-commerce giant were off more than 2%, amid continued pressure on 2020’s large-cap highfliers.
  • Shares of D.R. Horton Inc. DHI, +7.80% bounced more than 7%, after the home builder reported fiscal fourth-quarter profit and revenue that rose well above expectations, amid an 81% jump in net sales orders.
  • Shares of American Airlines Group Inc. AAL, -3.44%  pulled back, after the air carrier said it proposed a public offering of 38.5 million shares of common stock.
  • Carnival Corp. CCL, -14.13% shares fell more than 11% after the cruise operator revealed a proposed stock offering program valued at up to $1.5 billion. The filing to sell more shares comes after the stock soared 28.8% on Monday, and less than two weeks after the completion of its previous $1 billion stock offering program.
What are other markets doing?

The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, 0.956% was off 1 basis point at 0.943%. Yields and bond prices move in opposite directions.

The pan-European Stoxx 600 Europe Index SXXH, +0.44% rose 0.9%, while London’s FTSE 100 UKX, +1.78% jumped 1.8%.

Oil futures built on the previous session’s vaccine-inspired rally, with the U.S. benchmark CL.1, +1.91% up 2.4% at $41.24 a barrel. Gold rose, with the December contract GC00, +1.54% up 1.5% at $1,881.60 an ounce.

The ICE U.S. Dollar Index DXY, -0.02%, a measure of the currency against a basket of six major rivals, was little changed after a 0.6% rise on Monday.

MarketWatch has launched ETF Wrap, a weekly newsletter that brings you everything you need to know about the exchange-traded sector: new fund debuts, how to use ETFs to express an investing idea, regulations and industry changes, inflows and performance, and more. Sign up at this link to receive it right in your inbox every Thursday.