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U.S. equity futures were flat in overnight trading on Tuesday, amid this week’s rotation from tech stocks to cyclical stocks.
Dow futures fell 40 points. The S&P 500 and Nasdaq 100 futures contracts fell 0.1% and 0.14% respectively.
On Tuesday, the Dow Jones Industrial Average climbed 262 points. Hopes of a return to normal economic activity with an effective vaccine against Covid-19 fuel the rally. The small-cap Russell 2000 also outperformed, gaining 1.75%.
The S&P 500 fell 0.14%. The highly technological Nasdaq Composite lost 1.4%, with Microsoft, Amazon, Facebook and Alphabet all ending in the red.
Following the announcement by Pfizer and BioNTech of their more than 90% effective Covid-19 vaccine, investors have shifted away from tech names and homemaking stocks to cyclical stocks that rely on an economic recovery.
“The leadership rotation away from tech and Fangs to larger markets, including small caps, cyclical sectors and international equities, strengthened for a second day in a row,” said Jim Paulsen, strategist in Chief Investment Officer at Leuthold Group, at CNBC.
“Since the vaccine announcement before yesterday’s opening, investors have been selling ‘left-at-home’ stocks, mostly tech and communications, and buying ‘economy reopening stocks.’ The continuation of this trend today has only convinced more investors that this new trend could continue, ”he added.
Eli Lilly’s antibody drug was cleared by the Food and Drug Administration for emergency use Monday night. The agency said the drug could be used to treat mild to moderate cases of Covid-19 in patients over the age of 12.
The Dow and the S&P 500 both hit intraday highs on Monday, but closed their highs. The Dow Jones is up about 4% this week.
The energy sector is up 17% this week, as oil prices rise with hopes of improving demand. The financial sector has grown by around 9% since Monday.
The news on vaccines and antibody-based drugs comes as the United States once again surpassed its yesterday’s record for new daily Covid infections, by an average of seven days, while crossing the dark threshold of more than 10 million cases nationwide on Monday. The seven-day average of daily new cases Monday was 108,964, a 37% increase from a week ago, according to a CNBC analysis of data from Johns Hopkins University.
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