Wall Street hits the brakes after long rally

Wall Street hit the brakes Tuesday, a day after its remarkable, weeks-long rally brought the S&P 500 back to positive for the year and the Nasdaq to a record high.

The benchmark index fell 0.8 percent, its largest loss in almost three weeks, as traders cashed in on some of the market’s recent gains. Financial, industrial and health care stocks led the slide. Technology companies were among the gainers, helping to push the Nasdaq to another alltime high.

Skeptics have been saying for weeks that Wall Street’s huge rally, which reached 44.5 percent between late March and Monday, may have been overdone. The economy has given glimmers of hope that the recession could end relatively quickly as governments lift their lockdown orders, but the strength and speed of the stock market’s rebound has easily outpaced expectations for a recovery in the broader economy and corporate profits.

“Today is actually a pretty mild digestion of recent gains, and I think it’s long overdue,” said Sam Stovall, chief investment strategist at CFRA.

S&P 500 lost 25.21 points to 3,207.18. The index is now back in the red for the year and remains 5.3 percent below its all-time high set in February. The Dow Jones Industrial Average dropped 300.14 points, or 1.1 percent, to 27,272.30. The Nasdaq rose 29.01 points, or 0.3 percent, to 9,953.75.

In another sign of increased caution, the yield on the 10-year Treasury yield fell to 0.83 percent from 0.88 percent late Monday. It tends to move with investors’ expectations of the economy and inflation, though it’s still well above the 0.64 percent level where it started last week.

Wall Street has been generally rising since late March, at first on relief following emergency rescues by the Federal Reserve and Congress. More recently, investors have begun piling into companies that would benefit most from a reopening economy.

Banks, airlines, energy companies and others that rely heavily on economic growth have been leading the way in recent weeks.

Those companies went into reverse on Tuesday. American Airlines and Alaska Air Group both fell more than 8 percent a day after they were near the top of the leaderboard. Marathon Oil skidThe ded 9.1 percent.

Travel-related companies that have been among the hardest-hit stocks due to the outbreak piled up more losses. Norwegian Cruise Line sank 10.2 percent, while Carnival slid 7.5 percent.

Oil prices rose. Benchmark U.S. crude oil for July delivery rose 2 percent to settle at $38.94 a barrel. Brent crude oil for August delivery rose 0.9 percent to $41.18 a barrel.

The next big milestone for markets is coming Wednesday, when the Federal Reserve announces its decision on monetary policy following a two-day meeting.