People walk by the New York Stock Exchange.
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Stock futures declined in early morning trading on Tuesday following a record-setting rally sparked by promising news of a coronavirus vaccine.
Futures on the Dow Jones Industrial Average fell 126 points. S&P 500 futures and Nasdaq 100 futures also traded in negative territory. Earlier, Dow futures had fallen more than 200 points.
The overnight action came after a strong rally on Wall Street that saw the Dow and the S&P 500 hit new intraday record highs. The 30-stock average rallied more than 800 points, posting its biggest one-day gain since June 5. It surged more than 1,600 points at one point before the weakness in the tech sector put pressure on the broader market. The S&P 500 gained 1.2%.
U.S. pharmaceutical giant Pfizer and German biotech firm BioNTech announced Monday their coronavirus vaccine was more than 90% effective in preventing Covid-19. The news sent travel stocks soaring as the’ recovery of these companies depends on a successful economic reopening. American Airlines, Delta and United all jumped more than 15%, while Carnival, Norwegian and Royal Caribbean surged more than 25% each.
“The strong results from the Pfizer vaccine were better than most expected and means we could be opening back up sooner than expected,” said Ryan Detrick, chief market strategist at LPL Financial, “Coupled with an economy that continues to surprise to the upside and the stock market is now pricing in the prospects of a much better economy in ’21.”
While cyclical stocks led the market advance on Monday, the tech-heavy Nasdaq Composite fell 1.5% as investors dumped some of the popular stay-at-home plays such as Zoom Video and Netflix. The Nasdaq finished Monday’s session near its session low.
“The ‘stay at home’ trade, which has led the market higher for most of this year, may be falling out of favor,” said Lindsey Bell, chief investment strategist at Ally Invest. “There’s still a good long-term case for tech, but it may not outpace the rest of the market like it has since March.”
Pfizer’s big vaccine news came as the U.S. topped 10 million cases of Covid-19, a bleak milestone just 10 days after reaching the 9 million mark amid a record surge in daily infections. Many on Wall Street believe a viable vaccine would be crucial for the economy on its road to a full recovery.
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