S&P 500, Nasdaq retreat as tech stocks lose favor

By Medha Singh and Shivani Kumaresan (Reuters) - The S&P 500 and the Nasdaq fell on Tuesday as excitement over signs of a first successful late-stage COVID-19 vaccine trial faded, while investors continued to pull money out of some Big Tech companies that have benefited most from the pandemic. Amazon.com Inc , Facebook Inc and Microsoft Corp , which have boomed during this year's work-from-home shift and powered Wall Street to new highs, extended Monday's losses and pulled the tech-heavy Nasdaq down about 1.3%.

Reuters November 11, 2020 00:07:04 IST
S&P 500, Nasdaq retreat as tech stocks lose favor

SP 500 Nasdaq retreat as tech stocks lose favor

By Medha Singh and Shivani Kumaresan

(Reuters) - The S&P 500 and the Nasdaq fell on Tuesday as excitement over signs of a first successful late-stage COVID-19 vaccine trial faded, while investors continued to pull money out of some Big Tech companies that have benefited most from the pandemic.

Amazon.com Inc , Facebook Inc and Microsoft Corp , which have boomed during this year's work-from-home shift and powered Wall Street to new highs, extended Monday's losses and pulled the tech-heavy Nasdaq down about 1.3%.

The tech <.SPLRCT>, communication services <.SPLRCL> and consumer discretionary indexes <.SPLRCD> dropped sharply as investors moved to sectors expected to benefit from a full reopening of the economy, such as energy <.SPNY>, industrials <.SPLRCI> and materials <.SPLRCM>.

"We are seeing a rotation away from growth areas, in particular tech and communication services, mainly because investors want to gravitate more toward the groups that have been underperformers until now," said Sam Stovall, chief investment strategist at CFRA Research.

Value-linked stocks <.IVX>, which tend to outperform coming out of a recession, added 1%, while growth stocks <.IGX> fell 0.8%.

(GRAPHIC: five-year performance gap between growth and value stocks - https://fingfx.thomsonreuters.com/gfx/mkt/rlgvdawmkpo/Pasted%20image%201605016115229.png)

The main U.S. indexes hit new peaks on Monday as encouraging data from a late-stage COVID-19 vaccine trial spurred bets of a swift economic recovery next year. Democrat Joe Biden's projected victory in the U.S. presidential election also added to the market cheer.

"Although great news, it's just a plan and we need to see some practical things around it like how (the vaccine) is going to roll out, who's going to get it," said JJ Kinahan, chief market strategist, TD Ameritrade in Chicago.

Biden hailed the progress on the vaccine, but urged caution saying it would be "many more months" before widespread vaccination is available. Meanwhile, daily new U.S. cases topped 100,000 for the sixth straight day.

The apparent breakthrough in a coronavirus vaccine weakens the case for another large U.S. fiscal stimulus bill, but relief is still needed for struggling businesses, investors said.

Senate Majority Leader Mitch McConnell last week argued for a smaller coronavirus stimulus package after data pointed to a drop in U.S. unemployment rate in October. At 12:40 p.m. ET the S&P 500 <.SPX> lost 6.89 points or 0.19% to 3,543.61 and the Nasdaq Composite <.IXIC> lost 121.85 points or 1.04% to 11,591.93. The Dow Jones Industrial Average <.DJI> rose 158.46 points or 0.55% to 29,316.43.

Amgen Inc gained 3.6% after its asthma drug, being developed in collaboration with AstraZeneca , met the main goal of a late-stage study.

Ulta Beauty Inc topped gainers on the S&P 500, climbing 7.7% after the cosmetics store chain signed a long-term deal with Target Corp to open its own stores at the big box retailer's locations. Target gained about 2%.

Apple Inc edged higher ahead of an event where it is expected to unveil new Mac computers using its own in-house processor chips.

Advancing issues outnumbered decliners for a 1.8-to-1 ratio on the NYSE and a 1.5-to-1 ratio on the Nasdaq.

The S&P index recorded 10 new 52-week highs and no new low, while the Nasdaq recorded 65 new highs and 20 new lows.

(Reporting by Medha Singh in Bengaluru; Editing by Shounak Dasgupta and Sriraj Kalluvila)

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

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