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Tech Stocks Lead Sharp Afternoon Pullback On Wall Street

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Stocks showed a strong move to the upside in morning trading on Monday but pulled back sharply over the course of the afternoon. The tech-heavy Nasdaq showed a particularly steep drop after reaching a new record intraday high.

After jumping by as much as 2 percent, the Nasdaq plunged 226.60 points or 2.1 percent to 10,390.84. The S&P 500 also slumped 29.82 points or 0.9 percent to 3,155.22, while the Dow inched up 10.50 points or less than a tenth of a percent to 26,085.80.

The sharp pullback by the Nasdaq came as tech giants like Netflix (NFLX), Amazon (AMZN) and Facebook (FB) showed substantial downturns after reaching new record intraday highs.

Electric car maker Tesla (TSLA) also pulled back sharply, tumbling by 3.1 percent after soaring by as much as 16.2 percent.

The afternoon sell-off on Wall Street also came as California Governor Gavin Newsom rolled back the state's reopening following a recent spike in coronavirus cases.

Newsom ordered a statewide closure of all indoor operations at restaurants, bars, movie theaters, zoos and museums, with other businesses like gyms and hair salons being required to close their doors in counties on the state's watch list.

The early rally on Wall Street came as traders reacted positively to more upbeat news regarding a potential coronavirus vaccine.

Pfizer (PFE) and BioNTech (BNTX) announced that two of the companies' four investigational vaccine candidates received Fast Track designation from the U.S. Food and Drug Administration.

The companies said they expect to start the next phase of trials as soon as later this month and are anticipating enrolling up to 30,000 subjects.

If the ongoing studies are successful and the vaccine receives regulatory approval, Pfizer and BioNTech expect to manufacture up to 100 million doses by the end of 2020 and potentially more than 1.2 billion doses by the end of 2021.

The upbeat news on the vaccine front came as the U.S. has reported more than 60,000 new coronavirus cases for three days in a row, with Florida seeing a record 15,299 new cases on Sunday.

Shares of Pfizer jumped by 4.1 percent, contributing to the slight uptick by the Dow, while shares of BioNTech soared by 10.6 percent.

Sector News

Gold stocks moved sharply lower in afternoon trading, resulting in a 3.8 percent nosedive by the NYSE Arca Gold Bugs Index.

The sell-off by gold stocks came as the price of gold for August delivery gave back ground in electronic trading after ending the regular session up $12.20 at $1,814.10 an ounce.

Substantial weakness also emerged among software stocks, as reflected by the 3.6 slump by the Dow Jones U.S. Software Index. The index pulled back further off the record closing high set last Thursday.

Oil service stocks also saw considerable weakness on the day, with the Philadelphia Oil Service Index tumbling by 2.9 percent. The weakness in the sector came as the price of crude oil for August delivery fell $0.45 to $40.10 a barrel.

Biotechnology, networking and retail stocks also showed significant downturns over the course of the session, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan's Nikkei 225 Index spiked by 2.2 percent, while China's Shanghai Composite Index surged up by 1.8 percent.

The major European markets also showed strong moves to the upside on the day. While the French CAC 40 Index shot up by 1.7 percent, the U.K.'s FTSE 100 Index and the German DAX Index both jumped by 1.3 percent.

In the bond market, treasuries ended the day little changed after recovering from an initial drop. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 0.640 percent after reaching a high of 0.663 percent.

Looking Ahead

Earnings news may drive trading on Tuesday, with Citigroup (C), Delta Air Lines (DAL), JPMorgan Chase (JPM) and Wells Fargo (WFC) among the companies due to report their quarterly results before the start of trading.

Trading may also be impacted by reaction to the latest news on the coronavirus front as well as a report on consumer price inflation in the month of June.

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