Stocks fall, investors turn cautious following records
Stocks closed modestly lower on Wall Street Tuesday as investors turned cautious a day after major indexes closed at their latest record highs.
The S& P 500 slipped 0.2%, the benchmark index’s first decline in four days. Investors shifted money away from technology companies, which have been among of the biggest winners since the pandemic began. Industrial and financial stocks also fell broadly. Those losses outweighed gains in health care stocks and companies that rely on consumer spending.
Small- company stocks, which have been the biggest gainers this month, fell more than the rest of the market, pulling the Russell 2000 index of smaller companies 1.8% lower. The index is still on track to end the month 7.7% higher, more than twice as much as the S&P 500.
“That segment is probably due for a little bit of a pullback given its outperformance,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
The S& P 500 fell 8.32 points to 3,727.04. The Dow Jones Industrial Average dropped 68.30 points, or 0.2%, to 30,335.67. The techheavy Nasdaq slid 49.20 points, or 0.4%, to 12,850.22. The Russell 2000 gave up 36.89 points to 1,959.36.
The market’s pullback follows a strong, record-shattering run on Wall Street in recent weeks amid optimism that coronavirus vaccinations will pave the way in coming months for the economy to escape from the pandemic’s grip. With two days of trading left in 2020, the S&P 500 is up 15.4% this year, while the Nasdaq is up 43.2%.
Wall Street set fresh records on Monday after President Donald Trump signed a wide-ranging spending bill that includes $900 billion in COVID-19 aid and reams of other legislation on taxes, energy, education and health care. Investors hope that the measures will help tide the economy over until more people get vaccinations and help it through its pandemic-induced slump.
“We’re kind of seeing the same thing we’ve been seeing, the dichotomy between where the financial markets are and where the actual economy is,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
The recent round of aid from Washington was mostly expected and it would have taken a much bigger package to really make markets jump, he said.
The only other pending set of business from Washington is whether Senate Republicans will pass President Trump’s push to get $2,000 stimulus checks to Americans instead of the current $600. Senate Majority Leader Mitch McConnell on Tuesday blocked Democrats’ push to immediately bring President Donald Trump’s demand for bigger $2,000 COVID-19 relief checks up for a vote, saying the chamber would “begin a process” to address the issue.