Late drop in Big Tech stocks pulls indexes lower

Wall Street capped a day of listless trading Thursday with a late-afternoon pullback led by technology companies that left the major stock indexes in the red.

The S&P 500 fell 0.4 percent. The benchmark index, which had been up by 0.4 percent, was weighed down by losses in Apple, Microsoft and other huge tech companies even though most of the stocks in the index rose. Those losses outweighed gains in banks, industrials and other sectors.

Small-company stocks bucked the trend and continued to rally, a sign that investors are feeling more optimistic about the economy. Treasury yields also rose. Still, the market pullback has the S&P 500 on track for its first weekly loss in three weeks.

“It’s a pause in a momentum trade that probably keeps going for a while,“said Ross Mayfield, investment strategy analyst at Baird. “Sentiment is still pretty hot, but has cooled a little bit.”

The S&P 500 fell 14.30 points to 3,795.54. The Dow Jones Industrial Average slid 68.95 points, or 0.2 percent, to 30,991.52. The Nasdaq composite dropped 16.31 points, or 0.1 percent, to 13,112.64. The indexes are still close to their record highs set last week.

Markets have been mostly charging higher recently amid growing optimism that the rollout of coronavirus vaccines will set the stage for a big rebound for the economy and corporate profits later this year. Expectations are also rising for another round of stimulus coming for the economy because Democrats are set to soon have control of the White House, Senate and House.

President-elect Joe Biden is pushing for a $1.9 trillion coronavirus plan that would include $1,400 checks for individuals, on top of $600 provided in the last COVID-19 bill. The plan would also extend a temporary boost in unemployment benefits and a moratorium on evictions and foreclosures through September. It also provides funds for a mass vaccination campaign and a major expansion of local public health efforts.

Biden was expected to go over the plan in a speech later Thursday. Wall Street is hoping that more government stimulus can tide the economy over until COVID-19 vaccines get daily life back toward normal and trigger a powerful recovery later this year.

Another discouraging report underscored on Thursday how much damage the economy is taking as the pandemic worsens. Last week, 965,000 more U.S. workers filed for unemployment benefits last week as businesses shutter and lay off employees. That’s up sharply from the prior week’s tally of 784,000, and it was much worse than economists expected.

Such numbers could be fodder for critics of the stock market, who say prices have soared too high and look too expensive. But several analysts said they expect investors to continue to focus on hopes for a brighter future as temperatures warm and more people get vaccines.

“Further, a bleaker than expected jobs report translates into a greater likelihood for a fullthroated stimulus package, which perversely acts as a tailwind for the market,” said Mike Loewengart, managing director of investment strategy at E-Trade Financial.

Stocks of companies that would benefit in particular from a healthier, reopening economy held up best Thursday.

Smaller companies jumped more than the rest of the market, as they often do when investors are upgrading their expectations for the economy. The Russell 2000 index of small-cap stocks rose 43.38 points, or 2.1 percent, 2,155.35, continuing its much better performance than the big stocks in the S&P 500 so far this year.