U.S. stocks fell on Tuesday as a sharp decline in drug store shares and disappointing economic data weighed on the broader market.
The Dow Jones Industrial Average dropped 327 points, or 1.1%. The S&P 500 dipped 0.8%, while the Nasdaq Composite traded 0.3% lower.
Here’s what traders were watching Tuesday:
- Shares of pharmacy owner CVS Health and Dow-member Walgreens Boots Alliance dropped after Amazon launched a pharmacy business, which allows free delivery of medications for Prime members. Walgreens shares dropped 8.7% and CVS lost 6.9%. Amazon shares popped 0.5%.
- Tesla shares jumped 9.8% after S&P Dow Jones Indices said the electric car maker would join the S&P 500 index, effective Dec. 21. It was a long anticipated move for the surging stock. Before Monday, the shares had already more than quadrupled this year.
- The declines also came after data showed retail sales increased less than expected in October. Retail sales rose 0.3% last month, versus a 0.5% gain expected by economists polled by Dow Jones.
- Home Depot fell 3.1% despite a third-quarter earnings beat. Its sales also surged about 24% compared with a year ago as pandemic home improvement buying continued.
- Walmart shares dipped 0.3% even after earnings topped expectations on soaring e-commerce sales.
On Monday, the Dow and S&P 500 posted all-time closing highs. The Dow also notched an intraday record. Those gains came after Moderna released trial data showing its coronavirus vaccine was more than 94% effective, further raising expectations of a sharp economic recovery.
That marked the second positive announcement related to a coronavirus vaccine in a week. Pfizer and BioNTech said Nov. 9 that their Covid-19 vaccine candidate was more than 90% effective among participants in a late-stage trial.
Value stocks led the advance on Monday, building on their strong gains from last week. The iShares Russell 1000 Value ETF (IWD) jumped 1.9%, while its growth counterpart closed higher by just 0.5%.
“Value and smaller companies typically have more leverage to economic recoveries so a vaccine that would remove the weight of COVID-19 off the economy is a distinct positive,” wrote Bill Stone, chief investment officer at Stone Investment Partners. “Time will tell if this reversal in trends proves durable or starts “makin’ the tears rain down like a monsoon” for value proponents like the many recent false starts.”
The recent outperformance in value stocks comes even as the number of coronavirus cases continues to increase, dampening the country’s near-term economic outlook.
More than 1 million cases were confirmed in less than a week in the U.S., bring the country’s total to more than 11 million, according to data from Johns Hopkins University. Data from The Covid Tracking Project also showed U.S. coronavirus-related hospitalizations have risen to nearly 70,000.
“The near-term COVID backdrop remains bleak with exploding cases, rising hospitalizations, and additional mitigation measures,” wrote Adam Crisafulli, founder of Vital Knowledge. “But the broader tape is willing to overlook all this for the time being.”
— CNBC’s Yun Li contributed reporting.
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