Tuesday's Market Minute: The Post-Pandemic Push

Monday’s market action in the four major indices identified a clear divide between the winners and losers at the eventual end of the pandemic: big tech stands to lose and the Blue Chips and small-cap names stand to gain. That was evident in where the indices closed on Monday after Pfizer Inc. PFE and BioNTech SE BNTX said their Covid-19 vaccine is more than 90% effective: the S&P 500 (SPX) finished the session up 1.2%, while the tech-heavy Nasdaq-100 (NDX) lost 2.2%; the Dow Jones ($DJI) rose nearly 3.0%, and the small-cap Russell 2000 (RUT) gained 3.7%.

At least, that was the market’s immediate reaction to the first real light at the end of the tunnel we’ve seen since March 17. In reality, we know that Amazon.com, Inc. AMZN and Paypal Holdings Inc PYPL – both of which sold off yesterday – aren’t going anywhere, stay-at-home orders or not.

Online shopping and no-cash payments are still as much part of the future as brick & mortar retail remains a holdover from the past. Even those high-flying names like Zoom Video Communications Inc ZM and Peloton Interactive Inc PTON – both of which have seen percent gains in the hundreds this year – aren’t likely to take too much of a backseat when many offices and gyms reopen. That’s because the mentalities of many people worldwide have shifted, priorities have been adjusted, and what people are choosing to spend their money on right now reflects that. The extent of that shift, however, is still unknown.

What this market rotation out of big tech and stay-at-home stocks does mean for investors in the near-term, however, is more opportunity. Further potential sell-offs in those expensive names like ZM and PTON, as well as cheap entry into the seemingly inevitable return of airlines and cruise liners means that more people can afford to take part in future growth, albeit very carefully.

Photo by Roberto Júnior on Unsplash