Wall Street Drops After Strong Rally on Rise of COVID-19 cases
US stocks fell on Tuesday, adding to losses into the close, as investors took profits a day after the S&P 500 logged its longest streak of gains this year and as new US coronavirus cases rose further.
Large parts of the United States reported tens of thousands of new coronavirus infections. New York expanded its travel quarantine for visitors from three more states, while Florida’s greater Miami area rolled back its reopening.
“It’s a little bit of a pullback after a significant five-day move in the market coupled with the normal concerns about the virus and (Cleveland Federal Reserve Bank President Loretta) Mester talking about a long road to recovery,” said Michael Antonelli, market strategist at Baird in Milwaukee.
Mester said during an interview with CNBC that a resurgence in coronavirus cases across the country is making consumers more cautious, and more fiscal stimulus is needed to help the economy recover fully from the crisis.
U.S. stocks have risen recently, with the S&P 500 registering a fifth straight session of gains on Monday, despite rising new coronavirus cases in the United States as a slew of upbeat data for June bolstered views that an economic recovery is under way.
The Nasdaq claimed another record intraday high and held gains for a good part of the session before ending the day lower.
The Dow Jones Industrial Average fell 396.85 points, or 1.51%, to 25,890.18, the S&P 500 lost 34.4 points, or 1.08%, to 3,145.32 and the Nasdaq Composite dropped 89.76 points, or 0.86%, to 10,343.89.
“It’s healthy to have some pullbacks. Even a more dramatic pullback would be good, just because I think there’s a lot of uncertainty and it’s kind of advanced on a wall of worry here,” said Alan Lancz, president, Alan B. Lancz & Associates Inc, an investment advisory firm, based in Toledo, Ohio.
“There’s probably more profit-taking and volatility in store on the down side after the incredible rebound from the March lows,” he said.
The S&P 500 is still up more than 40% from its March closing low.
Walmart Inc (WMT.N) gained 6.8% after a report that the retailer is close to launching its membership program, a direct competitor for Amazon.com’s (AMZN.O) Prime service. Amazon shares slipped 1.3%.
Novavax Inc (NVAX.O) jumped 31.6% as the U.S. government awarded $1.6 billion to the drugmaker to cover testing, commercialization and manufacturing of a potential coronavirus vaccine in the country.
Earlier Tuesday, the S&P 500 e-minis EScv1 triggered a “golden cross” pattern, when the 50-day moving average crossed above the 200-day moving average, which could portend more gains for stocks in the short term.
Declining issues outnumbered advancing ones on the NYSE by a 2.73-to-1 ratio; on Nasdaq, a 2.63-to-1 ratio favored decliners.
The S&P 500 posted 32 new 52-week highs and no new lows; the Nasdaq Composite recorded 83 new highs and 15 new lows.
Volume on U.S. exchanges was 10.44 billion shares, compared with the 12.58 billion average for the full session over the last 20 trading days.