Stock Market Today: Growth Takes a Backseat to Value Yet Again

A rotation away from growth and into value continued apace Tuesday amid more news on the COVID front.

Less than 24 hours after Pfizer (PFE, -1.3%) and BioNTech (BNTX, +7.6%) released promising trial data for their vaccine candidate, the U.S. Food and Drug Administration approved Eli Lilly's (LLY, +3.0%) antibody treatment on an emergency-use basis.

"Yesterday after market close, LLY announced that its monoclonal antibody treatment (LY-CoV555) received FDA Emergency Use Authorization (EUA) based on positive findings from the BLAZE-1 Phase 2 studies to treat patients with mild to moderate Covid-19 cases after immediate diagnosis," writes CFRA analyst Sel Hardy (Buy). "As daily new Covid-19 infections and hospitalizations reach unprecedented highs, we think the EUA opens a considerable market opportunity for LLY," adding that AmerisourceBergen (ABC, +3.7%) will be in charge of U.S. delivery.

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That continued a trend of investors moving money from heavily bought growth stocks to battered cyclical plays.

The Dow Jones Industrial Average climbed 0.9% on Tuesday, to another new high of 29,420, led by the likes of Walgreens (WBA, +6.5%) and Boeing (BA, +5.2%), the latter rising amid reports that the government regulators are nearly finished with their review of proposed changes to the troubled 737-MAX aircraft. But the Nasdaq Composite suffered another big drop, losing 1.4% to 11,553.

Other action in the stock market today:

• The S&P 500 slipped by 0.1% to 3,545.
• Small caps had a day, as the Russell 2000 gained 1.9% to a fresh high of 1,737.
• Gold futures improved by 1.2%, settling at $1,876.40 per ounce.
• U.S. crude oil futures also settled higher, improving 2.9% to $43.61 per barrel.

Several Trends Could Be Here to Stay, However

A team of UBS strategists believe the rotation has more room to run: "After Monday's (and last week's) strong moves, we find that … US Growth stocks are pricing in the most hope of normalization, while European and US Value stocks are pricing in the least, and therefore should have more upside potential," they write.

But don't expect the coming months and 2021 to completely flip the script.

We could also see a continuation of several trends that blossomed over the past few months. For instance, the earnings calendar included a big win from D.R. Horton (DHI, +9.1), which reported a quarterly profit beat and raised its dividend, putting more fuel behind 2020's rally in housing-market stocks. A second-half resurgence in initial public offerings (IPOs) should remain strong, thanks to several big-name offerings expected to go live by the end of this year and throughout 2021.

And we could see continued outperformance by one of the market's most ignored sectors: materials stocks.

While metals miners and chemical producers don't tell scintillating stories, they've got what counts: an improving macroeconomic picture, often low valuations and, in some cases, decent dividend programs. While they've also been outperforming for several months now, the "great rotation" should still benefit many of these value-priced materials stocks.