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 benchmark index fell 0.8%, its largest loss in almost three weeks, as traders cashed in on some of the market’s recent gains. Financial, industrial and health care stocks led the slide. Technology companies were among the gainers, helping to push the Nasdaq to another all-time high.
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 strength and speed of the stock market’s rebound has easily outpaced expectations for a recovery in the broader economy and corporate profits.
“Today is actually a pretty mild digestion of recent gains, and I think it’s long overdue,” said Sam Stovall, chief investment strategist at CFRA.
The S&P 500 lost 25.21 points to 3,207.18. The index is now back in the red for the year and remains 5.3% below its all-time high set in February. The Dow Jones Industrial Average dropped 300.14 points, or 1.1%, to 27,272.30. The Nasdaq composite rose 29.01 points, or 0.3%, to 9,953.75.