The market opened higher on Wednesday amid optimism about a successful reopening of the economy and a potential coronavirus vaccine, but stocks cut gains amid a big drop in tech shares.
The Dow Jones Industrial Average was up 0.9%, over 200 points, by midday Wednesday. The S&P 500 briefly turned negative, but is now up 0.1%, while the tech-heavy Nasdaq is down 1%.
Tech stocks, like Facebook, Amazon, Apple, Netflix and Google-parent Alphabet all fell by over 0.5%, dragging the market lower.
The European Commission announced plans on Wednesday for a $826.5 billion recovery fund to help deal with the economic fallout from the coronavirus pandemic.
Stocks have been moving higher thanks to increasing optimism on Wall Street, with states beginning to reopen businesses and several companies working on potential coronavirus vaccines.
Earlier this week, biotech company Novavax said that it had started the first clinical trial for its experimental coronavirus vaccine, while pharmaceutical giant Merck announced that it is working with scientific research organization IAVI to develop a vaccine.
Stocks that would benefit from a reopening jumped again at the open on Wednesday, including cruise operators such as Carnival and Norwegian Cruise Line, airlines like United and American, and retailers Gap and Kohl’s.
“The stock market is pricing in a faster than expected recovery,” according to Andrew Smith, chief investment strategist at Delos Capital Advisors. “We expect further volatility as the economy starts to reopen,” he says, adding that his firm has tilted out of defensive sectors like consumer staples and utilities and into sectors tied to economic rebounds, such as financials and industrials.
What to watch for
Rising U.S.-China tensions. Many experts are worried about a derailment of the phase one trade deal—something Trump has repeatedly threatened to do. White House National Security Advisor Robert O’Brien said last Sunday that the U.S. is likely to impose sanctions on China if the country follows through with a new national security law that would give it greater control over Hong Kong.