Nasdaq leads gains with technology stocks back in favor

By Sinéad Carew (Reuters) - The Nasdaq led Wall Street's advance on Wednesday as investors switched back to technology stocks and away from economically sensitive sectors as they weighed COVID-19 vaccine progress against a virus surge and likely timing for a economic rebound. After falling sharply for two days, the tech-heavy Nasdaq was up almost 2% with 'stay-at-home' stocks led by Microsoft , Amazon.com Inc , Apple Inc and Netflix Inc gaining again. Monday's encouraging data from a late-stage vaccine had prompted a two-day rotation from technology stocks into sectors that typically outperform coming out of a recession such as industrials , materials and energy that have lagged broader market during the crisis

Reuters November 12, 2020 02:05:54 IST
Nasdaq leads gains with technology stocks back in favor

Nasdaq leads gains with technology stocks back in favor

By Sinéad Carew

(Reuters) - The Nasdaq led Wall Street's advance on Wednesday as investors switched back to technology stocks and away from economically sensitive sectors as they weighed COVID-19 vaccine progress against a virus surge and likely timing for a economic rebound.

After falling sharply for two days, the tech-heavy Nasdaq <.IXIC> was up almost 2% with "stay-at-home" stocks led by Microsoft , Amazon.com Inc , Apple Inc and Netflix Inc gaining again.

Monday's encouraging data from a late-stage vaccine had prompted a two-day rotation from technology stocks into sectors that typically outperform coming out of a recession such as industrials <.SPLRCI>, materials <.SPLRCM> and energy <.SPNY> that have lagged broader market during the crisis.

But investors changed gears Wednesday to buy the S&P growth index <.IGX>, which includes technology stocks, and sell the value index <.IVX>, which includes banks and energy stocks.

"We'll probably have these fits and starts of the rotation until we get into the spring," said Shawn Snyder, head of Investment Strategy at Citi Personal Wealth Management. "There's still really strong earnings for these technology companies and you're still facing a potential surge in COVID cases through the winter months and renewed restrictions and lockdowns."

Meanwhile, the top U.S. infectious disease specialist urged caution until a vaccine can be approved and distributed, as California and several states across the U.S. Midwest tightened restrictions.

Citi's Snyder also cited challenges around vaccine distribution and the question of whether individuals will take the vaccine as reasons for continued relevance of stay-at-home stocks versus "leave-your-home" industries such as travel.

"To think the style we've been living our lives in for the last nine months is suddenly going to change is a bit optimistic. Its going to take longer," he said.

As a result the technology index <.SPLRCT>, up 2%, led gainers among the S&P 500's 11 major sectors, followed by the consumer discretionary index <.SPLRCD>, which was up 1%. The biggest sector decliners were materials, down 1.5% and energy <.SPNY>, down 1.4%.

"We will see this tug of war between the virus and the vaccine and between growth and cyclicals for months, until there's a more definitive timeline for mass distribution of the vaccine," said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York.

At 2:40 p.m. EST, the Dow Jones Industrial Average <.DJI> fell 62.24 points, or 0.21%, to 29,358.68, the S&P 500 <.SPX> gained 20.62 points, or 0.58%, to 3,566.15 and the Nasdaq Composite <.IXIC> added 201.66 points, or 1.75%, to 11,755.51.

Markets, which also got a boost after Democrat Joe Biden was projected the winner of the U.S. election, have shrugged off legal challenges from President Donald Trump as no evidence of problems with votes has so far been produced.

The Democratic Party retained control of the U.S. House of Representatives with a lower majority, the Associated Press reported. As a result investors are now focused on whether they can wrestle Senate control from Republicans, which will not be decided until special elections in January.

Democrats may not be able to pass their larger stimulus plan if Republicans retain a Senate majority.

Lyft Inc was up 1% after the ride-hailing app said it was working on a new service to take a slice of the burgeoning food-delivery market, as it works to make up for a drop in quarterly revenue.

The Philadelphia SE chip index <.SOX> was up 3.5% after suffering sharp losses on Tuesday.

Declining issues outnumbered advancing ones on the NYSE by a 1.03-to-1 ratio; on Nasdaq, a 1.10-to-1 ratio favored advancers.

The S&P 500 posted 6 new 52-week highs and no new lows; the Nasdaq Composite recorded 76 new highs and nine new lows.

(Additional reporting by Medha Singh and Shivani Kumaresan in Bengaluru, Sinead Carew in New York; Editing by Sriraj Kalluvila, Shounak Dasgupta, Arun Koyyur and Tom Brown)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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