Monday was a tough day for the stock market in general, and the Nasdaq Composite (^IXIC 0.33%) took the brunt of the damage. As of just after noon EDT, the Nasdaq was down almost 1%, recovering only slightly from its worst levels of the day.

Contributing to the Nasdaq's poor performance was a lot of downward pressure from one of the best-performing industries over the past year. COVID-19 vaccine stocks were sharply lower, and below, we'll go into more details about what was weighing on the sector and what it means for the broader market.

Taking a shot

Among the top vaccine stocks on the Nasdaq, BioNTech (BNTX 2.13%) took the biggest hit, falling more than 10% at midday Monday. Novavax (NVAX 7.08%) was down almost 10%, while Moderna (MRNA 2.42%) held up relatively well with just a 6% decline.

Medical professional administering a shot to a patient.

Image source: Getty Images.

There's a huge tug-of-war occurring with vaccine stocks right now, and today, it looks as if the contingent of Wall Street analysts who are betting against the stocks are having their day in the sun. For a long time, analysts have argued that the huge advances that this trio of vaccine stocks has seen over the past few months has been driven solely by momentum, without the necessary fundamental business support to make it a sustainable upward move for their share prices.

With today's declines, some of the stocks have already seen significant corrections. Both Moderna and BioNTech have now fallen about 25% from their highs of just a week or two ago. Novavax has held up better because of some positive prospects on the horizon, but some are just as convinced that further declines are on the way for all of the stocks.

The bullish argument for vaccine stocks

Fundamentally, all three vaccine stocks have solid near-term prospects. Moderna and BioNTech already have vaccines approved and in use, and many people around the world haven't yet even gotten access to vaccines. Novavax still hasn't gotten Emergency Use Authorization for its vaccine candidate, but the company is getting orders from several countries, and most company watchers are optimistic about Novavax's chances of gaining approval relatively soon.

Moreover, initial hopes that COVID-19 would quickly disappear once vaccines became available have thus far proven to be incorrect. Despite high efficacy rates, vaccines don't offer 100% protection, and new variants have arisen that are more easily communicable and in some cases have shown reduced efficacy rates for vaccines. That has some health officials talking more seriously about booster shots, which could provide a much-needed source of additional and longer-lasting revenue for vaccine companies.

The unanswered question

In the long run, though, all three of these companies will have to demonstrate their ability to follow up success in fighting against COVID-19 with other products. Ideally, COVID-19 will prove to have been a testing ground giving vaccine providers valuable experience they can use to be more effective in coming up with vaccines or treatments against a much-wider range of diseases.

Analysts argue that the companies have few immediate prospects beyond their vaccines, which would potentially lead to a catastrophic plunge in sales if the pandemic comes under control. That's true in the short run, but the techniques that the vaccine developers have used now look a lot more promising than they did before the pandemic.

Biotech investors are used to making binary bets on events that will only become clear far in the future. That's why shareholders in these three Nasdaq vaccine stocks can expect continued volatility, likely not just for the remainder of 2021 but also into 2022 and beyond.