THE US stock market closed lower on Tuesday – pulled down by Apple and Tesla – while materials stocks climbed as investors waited for the US Congress to approve another stimulus package.
Following strong gains in the prior session, technology shares dipped in the resumption of a rotation by investors out of stocks that outperformed due to the coronavirus pandemic and into others viewed as likely to do well as the economy recovers.
The Dow Jones Industrial Average fell 0.46% to end at 31,391.52 points, while the S&P 500 lost 0.81% to 3,870.29. The Nasdaq Composite dropped 1.69% to 13,358.79.
The S&P 500 materials and consumer staples sector indexes rose.
Yields on the benchmark 10-year Treasury bonds have stabilised after hitting a one-year high last week.
“Part of it is just because technology went up so much last year, and if interest rates are on the rise, then the value of their future cash flows is diminished,” said Tom Hainlin, global investment strategist at US Bank Wealth Management.
The S&P 500 on Monday logged its best day since June as markets cheered approval of a third COVID-19 vaccine in the US and the US House of Representatives’ green light for a US$1.9 trillion coronavirus relief package.
The US Senate will start debating President Joe Biden’s relief bill this week when Democrats aim to pass the legislation through a manoeuvre known as “reconciliation” which would allow the bill to pass with a simple majority.
Apple dipped about 2% and Tesla declined more than 4%, with the two companies contributing the most to the S&P 500’s loss for the day.
The S&P 500 technology sector index dropped 1.6%, extending a pullback from late last month after a sell-off in the US bond market sparked fears over highly valued stocks. The consumer discretionary index dipped 1.3% with Amazon falling 1.6%.
The Russell 2000 index of smaller companies declined 1.9%, trimming its gain in 2021 to about 13% compared with the S&P 500’s rise of 3% in the same period.
Heavily shorted mortgage provider Rocket Companies surged 71% in its third straight day of gains as the stock drew interest on Reddit’s popular WallStreetBets.
Declining issues outnumbered advancing ones on the NYSE by a 1.36-to-1 ratio; on Nasdaq, a 2.64-to-1 ratio favoured decliners.
The S&P 500 posted 30 new 52-week highs and no new lows; the Nasdaq Composite recorded 165 new highs and 57 new lows.
Volume on US exchanges was 12.3 billion shares compared with the 14.9 billion average for the full session over the last 20 trading days. – March 3, 2021
