Stocks gave back most their earlier gains on Tuesday as a decline in tech shares offset some of the enthusiasm around the prospect of states reopening the U.S. economy.
The Dow Jones Industrial Average was up just 59 points, or 0.2%, after rallying 378 points to start the session. The 30-stock average was briefly down 100 points. The S&P 500 traded flat while the Nasdaq Composite slid 0.7%.
Facebook and Alphabet both traded at least 1% lower. Amazon slid 2.1% while Netflix pulled back 3.5%. Apple shares traded 0.5% lower.
Stocks were also under pressure as oil prices seesawed in another volatile session. The June contract for West Texas Intermediate was down more than 1% at $12.63 per barrel after trading slightly higher earlier on Tuesday. To be sure, WTI briefly fell more than 20%.
A partial reopening of the economy — in Alaska, Georgia, South Carolina, Tennessee, Texas, and others — boosted investor sentiment, with certain U.S. businesses poised to benefit from the first wave of consumers emerging from the coronavirus driven quarantine.
Wall Street was coming off of strong gains on Monday, with the Dow closing above 24,000 for the first time since April 17. Monday’s gains put the S&P 500 on pace for its biggest one-month gain since 1987 with an 11.4% surge in April.
Stocks that would benefit the most from a reopening led the market higher on Monday and were up again Tuesday. Shares of Wynn, Simon Property Group and Kohl’s were all higher by at least 1.8% after big gains on Monday. Bank stocks such as Citigroup and JPMorgan also rose more than 3% each.
“The stock market is increasingly reflecting a restart in the economy as more and more states show a willingness to allow some economic activities to come back online,” Jim Paulsen, chief investment strategist at The Leuthold Group told CNBC. “Not only did the S&P 500 index post a healthy gain today but it was led by those segments of the marketplace which are most dependent on an economic restart including small caps, high beta stocks, and cyclical sectors like financials, materials, and industrials.”
While many investors are bullish on the first wave of reopenings, DoubleLine CEO Jeffrey Gundlach said Monday the market could retest its March low as market participants could be underestimating the social disruptions from the coronavirus.
“I think a retest of the low is very plausible,” Gundlach said on CNBC’s “Halftime Report.” “People don’t understand the magnitude of … the social unease at least that’s going to happen when … 26 million-plus people have lost their job,” the so-call bond king added.
Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said the U.S. could be in for a “bad fall” season if an effective treatment for the coronavirus is not found by then. He noted the virus is “not going to disappear from the planet.”
More than 3 million virus cases have been confirmed globally, according to Johns Hopkins University. In the U.S., nearly 1 million cases have been confirmed.
Investors are also digesting the busiest week of earnings season, with 145 S&P 500 companies reporting between Monday and Friday. A quarter of the way through earnings season companies have proved the coronavirus is weighing heavy on corporate profits.
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