S&P 500’s win streak ends after late selloff
Wall Street pumped the brakes on its recent rally Tuesday, as a late slide in big technology companies left stocks broadly lower, erasing an early gain.
The reversal left the S&P 500 with a 0.8% loss after having been up 0.6% earlier. The decline in big-name technology stocks like Apple and Microsoft, plus losses in health care and communications stocks, outweighed gains in financial, industrial and energy companies. Tech stocks have far outpaced the rest of the market this year as investors bet they could still thrive in a stay-at-home economy.
The pullback ended the S&P 500’s seven-day winning streak. Despite the selloff, the benchmark index remains within 2% of the alltime high it reached in February, reflecting a stunning turnaround from a nearly 34% tumble in March when the coronavirus pandemic sent stocks into a nosedive.
Investors have grown more confident in recent weeks amid some positive economic data and betterthan-expected second-quarter results from companies, suggesting corporate profits could be headed higher in the second half of this year and in 2021. Traders are also increasingly optimistic that the many pharmaceutical companies working on ways to treat COVID-19 will deliver a working vaccine in the coming months.
“What is a risk worth taking is the assumption that a vaccine will be made available around year-end, and that this vaccine will help eliminate the virus in the coming year,” said Sam Stovall, chief investment strategist at CFRA Research.
The S&P 500 fell 26.78 points to 3,333.69. The Dow Jones Industrial Average dropped 104.53 points, or 0.4%, to 27,686.91. The Nasdaq composite lost 185.53 points, or 1.7%, to 10,782.82. The Russell 2000 index of small company stocks gave up 9.57 points, or 0.6%, to 1,575.10.
European and Asian markets closed broadly higher. Treasury yields rose, a sign that pessimism about the economy is easing. Oil prices fell. Benchmark U.S. crude oil for September delivery fell 0.8% to settle at $41.61 per barrel.
The stock market is on pace for its fifth month of gains in a row, even as the broader U.S. economy continues to struggle. While there have been some positive signs, including a larger-than-expected increase in hiring in July, the economy remains hobbled by high unemployment and an uneven reopening by businesses as the number of new confirmed coronavirus cases has increased in recent weeks. The outlook for a full economic recovery is clouded by worries that the resurgence in infections could force the economy to backtrack.