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U.S. Stocks Close Mixed As Tech Stocks Extend Pullback

wallstreet july26 10nov20 lt

Stocks turned in a mixed performance during trading on Tuesday, as the Dow added to the strong gain posted in the previous session but the tech-heavy Nasdaq extended the sharp pullback seen over the course of the trading day on Monday.

The major averages closed mixed for the second straight session. While the Dow advanced 262.95 points or 0.9 percent to 29,420.92, the S&P 500 edged down 4.97 points or 0.1 percent to 3,545.53 and the Nasdaq tumbled 159.93 points or 1.4 percent to 11,553.86.

The mixed performance on Wall Street came as traders continued to cycle out of tech stocks that benefited from the coronavirus pandemic and into cyclical stocks that struggled.

Stocks that benefited from the coronavirus-induced lockdowns such as Zoom (ZM), Amazon (AMZN) and Shopify (SHOP) saw further downside after falling sharply on Monday.

The shift comes as upbeat news about a coronavirus vaccine being developed by Pfizer (PFE) and BioNTech (BNTX) has generated optimism business may return to normal next year.

However, there could be more pain between now and then, as coronavirus cases in the U.S. continue to spike and have now topped 10 million.

Even the most optimistic projections suggest it will take months to distribute a vaccine, suggesting yesterday's spike to record highs may have been overdone.

The Dow benefited from an advance by shares of Boeing (BA), which spiked by 5.2 percent after a report from Reuters said the FAA is set to lift its grounding order on the aerospace giant's 737 MAX as early as next week.

Traders also kept an eye on the latest developments in Washington, as President Donald Trump continues to refuse to concede to Joe Biden.

The Supreme Court also attracted attention, as Justices heard arguments in case about Obamacare that could lead to the entire healthcare reform law being struck down.

Sector News

Tobacco stocks showed a substantial move to the upside on the day, driving the NYSE Arca Tobacco Index up by 4.9 percent. The index ended the session at a nine-month closing high.

Considerable strength was also visible among housing stocks, as reflected by the 4 percent spike by the Philadelphia Housing Sector Index.

Homebuilder D.R. Horton (DHI) moved sharply higher after reporting better than expected fourth quarter results, raising its dividend and providing upbeat guidance.

Natural gas and oil stocks also saw significant strength, with the NYSE Arca Natural Gas Index and the NYSE Arca Oil Index jumping by 3.9 percent and 3.2 percent, respectively.

On the other hand, software stocks saw substantial weakness on the day, resulting in a 3.5 percent nosedive by the Dow Jones U.S. Software Index.

CyberArk Software (CYBR) posted a steep loss after reporting third quarter earnings that beat estimates but on weaker than expected revenue. The cybersecurity company also forecast fourth quarter revenue below expectations.

Gold stocks also ended yesterday's sell-off despite a rebound by the price of the precious metal, with the NYSE Arca Gold Bugs Index tumbling by 3.4 percent.

Significant weakness was also visible among semiconductor stocks, as reflected by the 3 percent slump by the Philadelphia Semiconductor Index.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan's Nikkei 225 Index rose by 0.3 percent, while Hong Kong's Hang Seng Index surged up by 1.1 percent.

The major European markets also moved to the upside on the day. While the German DAX Index has climbed by 0.5 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index spiked by 1.6 percent and 1.8 percent, respectively.

In the bond market, treasuries closed modestly lower, extending the steep drop seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.4 basis points to 0.972 percent.

Looking Ahead

Trading activity on Wednesday may be somewhat subdued, with banks and the bond market closed due to the Veterans Day holiday.

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