S&P 500, Nasdaq pulls back as tech stocks lose favor

NEW YORK (Reuters) – The S&P 500 and Nasdaq fell on Tuesday as investors favored sectors that suffered most during the pandemic over those that benefited from viral lockdowns and social distancing due to the optimism that a COVID-19 vaccine would help the economy rebound.

Heavy technology .SPLRCT, Communication services .SPLRCL and consumer discretionary sectors .SPLRCD fell sharply as investors turned to small-cap equity indices and sectors like energy .SLEEP, industrial .SPLRCI and everyday consumer products .SPLRCS.

Also smart stocks such as Nvidia NVDA.O have been a drag on tech industry like Apple Inc AAPL.O launched its first laptop with an Apple-designed microprocessor.

“One of the reasons the technology is down is the same reason everything else is up. It is the reopening of trade. As the economy can reopen sooner rather than later, home equity won’t be as valuable, ”said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.

Amazon.com Inc AMZN.O, Facebook Inc FB.O and Microsoft Corp MSFT.O, which exploded during this year’s work-from-home trend and propelled Wall Street to new highs, extended Monday’s losses, weighing on the high-tech Nasdaq.

The exchanges were choppy as some investors watched for electoral uncertainty after US Secretary of State Mike Pompeo became the latest Republican to suggest that President Donald Trump would not concede the White House to Democrat Joe Biden.

But Leuthold’s Paulsen said most market participants largely ignored complaints from the Trump administration about the election outcome because they produced no evidence of a problem with the vote count.

At 2:55 p.m. EST, the Dow Jones Industrial Average .DJI rose 243.9 points, or 0.84%, to 29,401.87, the S&P 500 .SPX lost 3.47 points, or 0.10%, to 3,547.03 and the Nasdaq Composite .IXIC fell 142.29 points, or 1.21%, to 11,571.50.

Major U.S. indices hit intraday highs on Monday after Pfizer Inc PFE.N said the vaccine he developed with his German partner BioNTech SE BNTX.O was 90% effective against COVID-19.

U.S. Health Secretary Alex Azar said on Tuesday that if Pfizer submits its interim COVID-19 vaccine to health regulators as quickly as planned, the U.S. government expects to start vaccinations in December.

Biden praised the vaccine’s progress, but warned it would take “several more months” before a widespread vaccination became available. Meanwhile, daily new cases in the United States surpassed 100,000 for the sixth day in a row.

Value actions .IVX, which tend to outperform out of a recession, added 1.2%, while growth stocks .IGX were down 0.98%.

(GRAPH: five-year performance gap between growth and value stocks -)

The apparent breakthrough in a coronavirus vaccine could weaken the case for another big U.S. fiscal stimulus bill, though some investors say relief is still needed for struggling businesses.

Senate Majority Leader Mitch McConnell, a Republican, said Tuesday he saw no need for a multibillion-dollar coronavirus relief bill.

Amgen Inc AMGN.O gained 2.9% after its asthma drug, developed in collaboration with AstraZeneca AZN.L, achieved the primary objective of an advanced stage study.

Beauty Ulta Inc ULTA.O rose 2.9% after the cosmetics store chain signed a long-term deal with Target Corp TGT.N to open its own stores in big box stores. The target gained about 2%.

Rising issues outnumbered falling issues on the NYSE by a ratio of 1.78 to 1; on the Nasdaq, a ratio of 1.52 to 1 favored the advancers.

The S&P 500 posted 10 new 52-week highs and no new lows; the Nasdaq Composite recorded 73 new highs and 19 new lows.