U.S. stocks lost substantial ground at the close of a see-saw session on Wednesday as investors weighed encouraging vaccine developments against surging COVID-19 infections and lockdowns.
While all three major U.S. stock indexes closed in the red, surging Tesla Inc shares helped cap the Nasdaq’s loss. The TSX also ended lower, but losses were capped in Canada by gains in the energy sector.
“It’s a confused market because portfolio managers don’t know which time period to focus on,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “It’s this trade-off between the near term over the six to nine months of continued spread of the virus and the period after that when everyone’s vaccinated and the virus is eradicated.”
“There’s a lot of issues out there but the decided bias has been toward value and cyclicals,” Ghriskey added.
Pfizer Inc and its German partner BioNTech revealed a 95% success rate at the conclusion of their COVID-19 vaccine trial, just days after Moderna Inc announced a similar rate of success in preliminary data from its vaccine candidate.
Market participants have been greeting vaccine developments with guarded optimism as global new infections soar to record levels, raising the possibility of increased restrictions as the economy struggles to recover from recession. The United States remains the country worst affected by the pandemic.
The S&P/TSX Composite Index closed down 58.24 points, or 0.34%, at 16,889.82, with the materials sector the biggest drag, falling by 2.69%.
The TSX energy sector rose 0.75%. Oil prices firmed by about 1% on hopes OPEC and its allies will delay a planned increase in oil output and after Pfizer said its COVID-19 vaccine was more effective than previously reported. The market was also supported by a smaller-than-expected increase in U.S. crude stockpiles last week. Brent crude rose 59 cents, or 1.4%, to settle at $44.34 a barrel while U.S. West Texas Intermediate crude gained 39 cents, or 0.9%, to end the session at $41.82.
U.S. gold futures settled down 0.6% at $1,873.90. “The rollout of positive vaccine developments is reducing gold’s lure as a safe haven. (Although) it still seems to be in a trading range, the big moves up seem to be finished for now,” commented ED&F Man Capital Markets analyst Edward Meir.
The Dow Jones Industrial Average fell 344.93 points, or 1.16%, to 29,438.42, the S&P 500 lost 41.74 points, or 1.16%, to 3,567.79 and the Nasdaq Composite dropped 97.74 points, or 0.82%, to 11,801.60.
All 11 major sectors in the S&P 500 closed in negative territory, with energy shares suffering the biggest loss.
Third-quarter reporting season has reached the final inning, with 468 of the companies in the S&P 500 having reported. Of those, 84.4% have surprised consensus to the upside, according to Refinitiv.
Boeing Co initially provided the biggest lift to the Dow after the Federal Aviation Commission green-lighted the planemaker’s grounded 737 MAX aircraft to resume flights, but its shares later reversed course, shedding 3.2%.
Target Corp handily beat quarterly profit and sales estimates, boosted by a 155% jump in comparable digital sales. The retailer’s stock rose 2.3%.
Lowe’s Companies Inc dropped 8.2% after the home improvement retailer forecast lower-than-expected holiday quarter earnings as it beefs up its online business and doles out employee bonuses to ease pandemic-related hardship.
Declining issues outnumbered advancing ones on the NYSE by a 1.52-to-1 ratio; on Nasdaq, a 1.57-to-1 ratio favored decliners.
The S&P 500 posted 30 new 52-week highs and no new lows; the Nasdaq Composite recorded 142 new highs and nine new lows.
Volume on U.S. exchanges was 11.42 billion shares, compared with the 10.44 billion average over the last 20 trading days.
Read more: Stocks that saw action Wednesday - and why
Reuters, Globe staff
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