Stocks struggled for direction on the first trading day of the second half, as promising news about a possible COVID-19 vaccine and better economic data were tempered by a drop in energy stocks.
A reading that showed U.S. manufacturing activity hit its highest level in more than a year helped bullish sentiment, as did an announcement that Pfizer's (PFE, +3.2%) coronavirus vaccine under development was found to be well tolerated in early-stage human trials.
In a countervailing trade, energy stocks declined amid fears that the U.S. could see a return to widespread lockdowns to slow the spread of COVID-19.
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Strength in the technology sector kept the Nasdaq aloft. Amazon (AMZN, +4.4%) and Facebook (FB, +4.6%) in specific gave the tech-heavy composite enough oomph to gain 1.0% to a record-high 10,154. The S&P 500 finished 0.5% higher to 3,115, while the Dow closed Wednesday down 0.3% to 25,734. The small-cap Russell 2000 lagged them all, dropping 1.0% to end at 1,427.
While fears of shutdowns dragged down economically sensitive small caps and the energy sector, Brad McMillan, Chief Investment Officer for Commonwealth Financial Network, offers up some optimism for investors in his midyear outlook:
"The real question about the coronavirus for the rest of 2020 is not if there will be a second wave, but whether it will be large enough to derail the economic recovery underway," he writes. "So far, it does not look like it will. As of late June, we are seeing significant second waves in several states, and rising case counts in many others.
"Although it is quite possible we will see lockdowns locally, a national shutdown looks unlikely, which should allow much of the recovery to continue."
A Different Investing Landscape
As uncertain as the pandemic has made investors of all stripes, one thing Wall Street can agree on is that coronavirus has changed the way we live and, by extension, the way we invest.
Health-care stocks were once thought to be boring-but-solid value stocks, and not much more. Now, fear of new diseases has caused some of these defensive, nest-egg investments to morph into growth stocks.
Meanwhile, emerging-markets stocks, once left for dead, are starting to show signs of life.
Indeed, there's even a new exchange-traded fund, the Direxion Work From Home ETF (WFH) that seeks to capture the upside of more and more people working from home. Investors who want to profit from this angle of life in a pandemic by building their own portfolios can get a head start by checking out names that will flourish in the work-from-home age.
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