U.S. equity futures rose on Wednesday with the Dow Jones Industrial average set to gain for a third day after news of an effective Pfizer Covid-19 vaccine earlier this week sparked hopes of a return to normal economic activity.
Dow futures added 209 points, or 0.7%. The move implied an opening gain of about 200 points. S&P 500 futures were up 0.7%.
What was different on Wednesday was that technology stocks were bouncing back. Nasdaq 100 futures were up 0.9%.
On Tuesday, the Dow Jones Industrial Average climbed 262 points and on Monday it was up more than 800 points following Pfizer and BioNTech’s announcement about their more than 90% effective Covid-19 vaccine.
The news caused investors to move out of technology names and stay-at-home stocks and into cyclical stocks that hinge upon a recovering economy, causing Nasdaq names to underperform this week.
In early trading Wednesday, the rally broadened out with some of those tech names bouncing back. Zoom Video was up 4% in premarket trading, while shares of Amazon were up about 2%.
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 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 [Tuesday] has only convinced more investors this new trend may persist,” he added.
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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