Wall Street Mostly Higher as Investors Move into Economically Sensitive Cyclical Stocks

Optimism over positive vaccine trials and expectations of a new round of stimulus from the government have offset a surge in coronavirus cases and worries over a mixed earnings season, encouraging U.S. stock market investors to rotate out of tech-driven stocks and into economically sensitive cyclical stocks.

The price action suggests investor willingness to bet on value plays indicating that investors think the global economy is going to improve.

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“Ultimately, its healthier for the market when cyclicals perform better,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana.

In the cash market on Tuesday, the benchmark S&P 500 Index settled at 3257.30, up 5.46 or +0.18%. The blue chip Dow Jones Industrial Average finished at 26840.40, up 159.53 or +0.63% and the technology-based NASDAQ Composite closed at 10680.36, down 86.73 or -0.91%.

The Internals

The S&P 500 Index moved into positive territory year-to-date, up more than 1%. The NASDAQ Composite is up nearly 20% since January 1, while the Dow Jones Industrial Average moved to down a little more than 5% for the year.

On Tuesday, financial, industrial and energy stocks provided the biggest lifts to the bellwether S&P 500 and blue-chip Dow as investors pivoted back to cyclicals. A drop in tech shares capped the NASDAQs gains.

Advancing issues outnumbered declining ones on the NYSE by a 4.28-to-1 ratio; On the NASDAQ, a 1.98-to-1 ratio favored advancers.

The S&P 500 posted 43 new 52-week highs and no new lows; The NASDAQ Composite recorded 116 new highs and 10 new lows, Reuters reported.

[fx-article-ad]The Sectors

Of the 11 sectors in the S&P 500 Index, all but tech were in the black.

Energy companies were up 5.9%, the largest daily jump since June 5, as crude prices climbed amid signs of rebounding demand.

Stock Movers

Coca-Cola shares gained 2.7% after the beverage maker beat earnings estimates and said demand is improving.

Defensive industrial Lockheed Martin Corp topped quarterly consensus estimates and raised its full-year profit and resume estimates, sending its shares up 2.6%. The forecasts were driven by higher quarterly sales in its aeronautics unit that makes the F-35 fighter jet.

Tesla Inc fell 2.4%, retreating from Monday‘s record closing high after JPMorgan Chase downgraded the electric car maker’s stock to “market perform.”

After the bell, United Airlines said it lost $1.63 billion during the second quarter, driven by a plunge in air travel demand because of the coronavirus pandemic. During the same quarter last year it posted a $1.05 billion profit.

For a look at all of todays economic events, check out our economic calendar.