It has been a rough road this year for the stay-at-home stocks that took off in 2020 amid the COVID-19 pandemic as investors have rotated into cyclicals that could partake greatly in the economic rebound. But at least for one day, that dynamic has changed back to the trend seen for most of last year.
Shares of popular stay at home names rose Tuesday. Zoom (ZM) popped 3.5%, Peloton (PTON) rose 3.5%, DocuSign (DOCU) gained 5% and Netflix (NFLX) advanced 1% Tuesday on news of an immediate pause in the use of Johnson & Johnson's single use COVID-19 vaccine. All four stocks had been down this year prior to the JNJ setback — paced by a nearly 20% drop in at-home fitness provider Peloton — on fears of sharply slower growth as life returned to some form of normal as vaccinations accelerated.
The pause in injections for JNJ's vaccine comes after six women between the ages of 18 and 48 developed blood clots within one to three weeks of vaccination. One woman died after getting the vaccine and a second woman in Nebraska was hospitalized in critical condition, according to The New York Times.
Nearly 7 million people in the U.S. have received the JNJ vaccine. The U.S. Food and Drug Administration (FDA) encouraged those folks to watch for any signs of a reaction in an audio press conference Tuesday.
But the worrying news has now put investors — who bid up the market to a record high by late last week — on edge for a possibly slower than expected economic recovery. Or in other words, a prolonging in the pandemic as people wait for greater availability in vaccines from Moderna and Pfizer/BioNTech while avoiding JNJ's shot.
The Dow Jones Industrial Average fell 145 points by early afternoon trading, while the S&P 500 flirted with gains and losses. Hot reopening trades such as airliner Delta (had been up 16% this year before JNJ's news) fell 2% and cruise line operator Royal Caribbean declined 1% (it had been up 15% this year before JNJ's news).
Most strategists Yahoo Finance talked with say the JNJ news warrants careful monitoring in the days ahead, especially as the market continues to trade at 10-year high valuations. But most stop short in saying JNJ's setback will equate to a meaningful setback for investors and the economy.
"I don't think so," MKM Partners chief economist and macro strategist Michael Darda told Yahoo Finance Live, when asked if he would be cutting his second quarter GDP forecast in light of the JNJ development. "The vaccine rollout has been intensifying. JNJ already had issues with production and distribution. So even if the JNJ vaccine is halted indefinitely, I think we are rapidly heading into a situation in the U.S. where vaccines if anything are in surplus — meaning anyone that wants one can get one."
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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