S&P 500, Dow snap seven-day winning streak as concern mounts over stimulus deal
U.S. stocks closed lower on Tuesday, with the S&P 500 and Dow snapping a seven-day streak of gains and falling late in the session on growing uncertainty about breaking a stalemate in Washington over a fiscal stimulus deal.
Both indexes had been higher for much of the session, and the S&P 500 came within striking distance of its closing record high from February, before the onset of the coronavirus crisis in the United States that caused one of Wall Street’s most dramatic crashes in history.
The day’s declines followed comments from U.S. Senate Republican leader Mitch McConnell, who told Fox News that White House negotiators had not spoken on Tuesday with Democratic leaders in the U.S. Congress on coronavirus aid legislation after talks broke down last week.
Investors have been hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with U.S. cases surpassing 5 million last week.
“We’re sitting here close to the all-time highs in the S&P 500, so any potential negative headline like that can cause a hiccup,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
The Nasdaq fell more than 1%, extending recent losses and registering its biggest daily percentage decline since July 23, with investors continuing to shed technology-related market heavyweights in favor of value names.
Wedbush trader Joel Kulina said concerns about the stalemate in stimulus negotiations added to pressure to sell recently strong performing tech stocks.
“It just feels like an acceleration of the growth unwind that started last Friday. Today marks day three of the unwind out of growth,” Kulina said. “But I’m not seeing panicking.”
Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Microsoft (MSFT.O) were the biggest drags on the S&P 500. Financials .SPSY and industrials .SPLRCI, which have underperformed other sectors this year, were the only two positive S&P 500 sectors on the day.
The Dow Jones Industrial Average .DJI fell 104.53 points, or 0.38%, to 27,686.91, the S&P 500 .SPX lost 26.78 points, or 0.80%, to 3,333.69 and the Nasdaq Composite .IXIC dropped 185.53 points, or 1.69%, to 10,782.82.
The Russell 1000 value .RLV index rose sharply during the session before ending near flat. It sharply outperformed the Russell 1000 growth .RLG index, which sank 1.5%.
In early afternoon trading, the S&P 500 hit a session high of 3,381.01, putting it just 0.15% shy of its 3,386.15 record closing high and 0.37% from its 3,393.52 all-time intraday peak, both registered on Feb. 19.
Ultra-low interest rates, trillions of dollars in stimulus and, more recently, a better-than-feared second-quarter earnings season have allowed all three of Wall Street’s main indexes to recover.
Declining issues outnumbered advancing ones on the NYSE by a 1.05-to-1 ratio; on Nasdaq, a 1.52-to-1 ratio favored decliners.
The S&P 500 posted 45 new 52-week highs and no new lows; the Nasdaq Composite recorded 97 new highs and 14 new lows.
Volume on U.S. exchanges was 11.24 billion shares, compared with the 10.32 billion average for the full session over the last 20 trading days.