Late Drop Leaves US Stocks Lower 08/11 15:58
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.
(AP) -- 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
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
The pullback ended the S&P 500's seven-day winning streak. Despite the
sell-off, the benchmark index remains within 2% of the all-time 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 better-than-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
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.
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 jobs report on Friday that showed 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 an
full economic recovery is clouded by worries that the resurgence in infections
could force the economy to backtrack.
Unprecedented actions by the Federal Reserve to stabilize markets this
spring, including lowering interest rates and ramping up bond purchases, have
made stocks attractive relative to other assets and given traders enough
confidence to keep snapping up stocks.
Meanwhile, investors continue to keep an eye on Washington for a fresh
lifeline for the U.S. economy. On Saturday, Trump issued executive orders to
extend an expired benefit for unemployed workers, among other things, in
response to a collapse of negotiations on Capitol Hill for another economic
rescue bill. Critics said the moves did not go far enough to support the
economy and questioned how they would work.
While talks between Democrats and Republicans on a new economic relief
package appear to have stalled, investors are still optimistic both sides will
reach an agreement.
"The markets do show that they believe something is going to get passed,"
said Tom Martin, senior portfolio manager at Globalt Investments.
Traders also have been grappling with uncertainty over widening antagonisms
between the United States and China, the world's largest economies. The two
sides are scheduled to hold virtual trade talks at the end of the week.
The yield on the 10-year Treasury rose to 0.64% from 0.57% late Monday, a
Oil prices closed lower after being up earlier. Benchmark U.S. crude oil for
September delivery fell 0.8% to settle at $41.61 per barrel. Brent crude oil
for October delivery fell 1.1% to settle at $44.50 per barrel.