The Dow Jones Industrial Average fell on Tuesday after the market scored its best session in six weeks a day earlier on rising optimism about a coronavirus vaccine.
The 30-stock Dow traded 100 points lower, or about 0.4%. The S&P 500 was flat while the Nasdaq Composite outperformed, rising 0.6%.
Both the Dow and S&P 500 fell to their session lows after a STAT News report raised concerns about the trial results for a potential coronavirus vaccine from Moderna.
Home Depot shares lost 1.6% to lead the Dow lower after the home improvement retailer said net income last quarter dropped 10.7% due to extra costs related to the pandemic. Although the retailer also said sales increased by 7% for the period. Walmart shares were down 1.7%, giving up earlier gains, despite soaring e-commerce sales in the first quarter.
Other retailers such as Kohl’s, Macy’s and Nordstrom were also under pressure.
Gains from Big Tech lifted the S&P 500 and the tech-heavy Nasdaq. Amazon and Netflix rose 2.3% and 0.8%, respectively, to hit fresh record highs. Facebook advanced 3.3% while Alphabet and Apple traded slightly higher.
Investors turned their attention to Washington as Treasury Secretary Steven Mnuchin and Federal Reserve Chairman Jerome Powell testified before the Senate Banking Committee. Their testimony was part of required updates to Congress on the economic response to the coronavirus pandemic.
Mnuchin said the government is “fully prepared to take losses” on coronavirus business bailouts. That testimony comes after Powell told CBS’ “60 Minutes” the central bank still has plenty of ammunition to support the economy.
Despite all this, “it’s still very tough from a fundamental perspective for anyone to get incredibly bullish,” said Yousef Abbasi, director of U.S. institutional equities at INTL FCStone. “If we get more data and cities start to reopen … then I would anticipate more confidence among investors.”
Data compiled by Johns Hopkins University shows more than 4.8 million cases have been confirmed worldwide, with over 1.5 million of those infections in the U.S. alone.
Tuesday’s muted action followed a strong rally on Wall Street that saw the Dow and S&P 500 both enjoy their biggest one-day gains since April 6. Investors cheered news that an experimental coronavirus vaccine from Moderna showed promising early signs. The 30-stock Dow jumped more than 900 points, while the S&P 500 closed the day up 3.2%, hitting its highest level since March 6.
“With over 100 treatments and vaccines under development, a medical breakthrough, a more sophisticated test and trace model, and government support could drive more upside,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “But our downside scenario cannot be ruled out. This could be triggered by a significant second wave of virus cases breaking out.”
With Monday’s gains, the S&P 500 has rebounded 32% from its March 23 low, now sitting about 13% below its record high in February.
Monday’s rally also led the S&P 500 to close at its highest level since March 6.
“No matter how we slice it, yesterday’s market performance was monstrous,” said Frank Cappelleri, executive director at Instinet, highlighting the strength in bank stocks during Monday’s rally. However, “buying weakness and selling strength has proven to be the most profitable strategy to play Banks up to this point. That certainly could change, but we won’t know if that can or will occur until the next breakout attempt happens.”
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