The S&P 500 gave up its gains with less than one hour left in the session as declines in some of the major tech names mounted.
The broader market index was down 0.5% in late-day trading. At one point in the day, the S&P 500 was up as much as 0.6%. The Dow Jones Industrial Average also saw most of its gains evaporate and traded just 21 points higher, or 0.1%. The Nasdaq Composite lagged, falling 1.1%.
Earlier in the day, the S&P 500 was within 0.5% of its intraday all-time high from Feb. 19.
Facebook and Amazon each fell more than 1% along with Microsoft. Apple and Netflix were both down over 2%. Alphabet dipped 0.6%. Those losses offset gains from shares that benefit from the economy reopening.
Gap shares were up more than 3% and Norwegian Cruise Line advanced 4%. Wynn Resorts and Simon Property also traded higher.
“A concern in the market has been that you’re seeing it becoming tighter and tighter,” said Quincy Krosby, chief market strategist at Prudential Financial. This rotation “helps the overall health of the market. That’s what’s important now and what’s needed.”
Both the S&P 500 and Dow traded higher earlier in the day after local news agencies reported Russian President Vladimir Putin claimed the country had given regulatory approval for the world’s first Covid-19 vaccine.
While there was skepticism about whether Russia had developed a safe vaccine so quickly, the news triggered optimism from investors about the race for an inoculation and perhaps that the market isn’t pricing in how quickly a valid one could be ready.
A Johnson & Johnson executive also told Reuters the company could produce 1 billion doses of its vaccine candidate if it proves to be successful. J&J shares dipped 0.3%, however.
“Markets are looking forward to better days ahead,” Jeff Buchbinder, equity strategist at LPL Financial, said in a note. “Although the timing is uncertain, the stock market is expressing confidence that the pandemic will end eventually with a vaccine—or multiple vaccines—and with help from better treatments in the interim.”
Goldman Sachs over the weekend raised its economic growth outlook, predicting at least one vaccine approved by the end of this year and widespread distribution of the drug by the second quarter of next year.
Dennis DeBusschere, quantitative strategist at Evercore ISI, also pointed out that coronavirus-related hospitalizations have seen a sharp drop recently. “Recovery stocks’ returns have accelerated relative to Quarantine as net hospitalizations have collapsed. That will continue assuming vaccine trends remain positive and fiscal stimulus gets passed,” he said.
Investors still grappled with the uncertain fate of further coronavirus stimulus aimed at supporting Americans struggling during the pandemic.
Treasury Secretary Steven Mnuchin said Monday the White House is open to resuming coronavirus aid talks with Democrats and putting more relief money on the table to reach a compromise. However, Senate Majority Leader Mitch McConnell said Tuesday negotiations with Democrats were at a stalemate.
Over the weekend, Trump signed four executive orders to extend some coronavirus aid, including unemployment benefits, a payroll tax holiday, defer student loan payments through 2020 and to extend federal eviction protections.
“Given the limited scope of the deal and the positive market reaction, equity investors continue to embed a likelihood that a larger agreement is reached,” Mark Hackett, Nationwide’s chief of investment research, said in a note on Monday.
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