Wall Street hits the brakes after weekslong rally

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

The S&P 500 fell 0.8%, its largest loss in almost three weeks. A day earlier, it had turned positive for the year for the first time since February.

Skeptics have been saying for weeks that Wall Street’s huge rally, which reached 44.5% 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 stock market has been soaring much more quickly than the economy and corporate profits are expected to.

“We’re seeing a little bit of a pause and a little bit of a reversal,” said Bill Northey, senior investment director at U.S. Bank Wealth Management. “Some of that is an appropriate reconciliation with the pace for the restart.”

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

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

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 that’s growing again.

Banks, airlines, energy companies and others whose profits need the economy to get closer to normal have been leading the way in recent weeks.

But such companies went into reverse on Tuesday. American Airlines and Alaska Air Group both fell more than 8% for some of the sharpest losses in the S&P 500.