U.S. equity futures were mixed in early morning trading on Wednesday, amid this week’s rotation out of technology stocks into cyclical names.
Dow futures added 208 points, while S&P 500 futures and Nasdaq 100 futures were in mildly positive territory.
On Tuesday, the Dow Jones Industrial Average climbed 262 points. Fueling the rally is the hopes of a return to normal economic activity with an effective Covid-19 vaccine. The small cap Russell 2000 also outperformed, gaining 1.75%.
The S&P 500 fell 0.14%. The technology-heavy Nasdaq Composite lost 1.4%, with Microsoft, Amazon, Facebook and Alphabet all closing in the red.
Following Pfizer and BioNTech’s announcement about their more than 90% effective Covid-19 vaccine, investors moved out of technology names and stay-at-home stocks and into cyclical stocks that hinge upon a recovering economy.
“The leadership rotation away from technology and Fangs toward broader market plays including small caps, cyclical sectors and international stocks strengthened for a second consecutive day,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC.
“Since the vaccine announcement before yesterday’s open, investors have been selling ‘stay at home stocks,’ mostly technology and communications, and buying ‘economy re-opening stocks.’ The continuation of this trend today has only convinced more investors this new trend may persist,” he added.
Eli Lilly’s antibody drug was cleared by the Food and Drug Administration for emergency use late Monday. The agency said the drug could be used to treat mild-to-moderate cases of Covid-19 in patients who are older than 12 years old.
Both the Dow and S&P 500 hit intraday record highs on Monday, but closed off their highs. The Dow is up about 4% this week.
The energy sector is up 17% this week, as oil prices gain on hopes of improving demand. The financial sector has risen about 9% since Monday.
The vaccine and antibody drug news comes as the United States once again topped its prior day record of daily new Covid infections, on a seven-day average, while also crossing the bleak milestone of more than 10 million cases nationwide on Monday. The seven-day average of daily new cases Monday was 108,964, a 37% increase from a week ago, according to a CNBC analysis of data from Johns Hopkins University.
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