Stocks fall broadly, led by weakness in tech companies
U.S. stock indexes pulled back from their recent record highs Wednesday as COVID-19 cases surged and coronavirus vaccines moved closer to distribution.
The Standard & Poor’s 500 index fell 0.8%, as losses in technology companies outweighed gains in industrial, energy and materials stocks. The benchmark index is still up 1.4% for the month after climbing to record highs four times in the last two weeks.
Markets have been mostly pushing higher in recent weeks on hopes that one or more coronavirus vaccines will begin to be distributed soon and start to ease the pandemic’s grip on the economy.
A vaccine from Pfizer and German partner BioNTech, which is already in use in Britain, is on track for a positive review and potential approval in the U.S. within the next week. The Food and Drug Administration will also consider a vaccine developed by Moderna this month.
But there could be more economic damage in store over the next few months, and investors are still closely watching Washington for any developments on another shot of stimulus for individuals, businesses and state governments. Congress is still divided over the size and scope of any new package, and the Trump administration has added to the potential plans with a new $916-billion proposal.
“You haven’t seen a deal out of Congress, so to the extent that markets have been rallying on another round of hope about stimulus, not getting that lets a little bit of air out of the market,” said Willie Delwiche, investment strategist at Baird.
The S&P 500 dropped 29.43 points to 3,672.82. The Dow Jones industrial average fell 105.07 points, or 0.4%, to 30,068.81. The tech-heavy Nasdaq composite declined 243.82 points, or 1.9%, to 12,338.95.
The Russell 2000 index of small-company stocks fell 15.63 points, or 0.8%, to 1,902.15. Small-company stocks have been outgaining the broader market this month, and the Russell 2000 is holding on to a 4.5% gain.
Technology stocks fell, dragging much of the market with them. Healthcare and communications stocks also slipped. Microsoft shed 1.9% and Pfizer fell 1.7%.
About 56% of the companies in the S&P 500 fell. Qorvo, the biggest decliner, slid 5.6%.
Treasury yields rose, a sign of optimism for the economy. The yield on the 10-year Treasury rose to 0.94% from 0.90%.
Investors showed they still have an appetite for IPOs: Meal delivery service DoorDash soared 85.8% in its market debut. The company has been one of the beneficiaries of the stay-at-home economy as more people shop and order food from their homes.
The market has generally been making gains as investors weigh the continued economic damage being inflicted by the virus against anticipation for a return to normalcy as vaccines start to move closer to approval and wide distribution. The recent surge in coronavirus cases and tighter restrictions on businesses over the last few weeks have again raised the importance of a vaccine for beaten-down businesses.
European markets ended mixed. Asian markets mostly rose.