The S&P 500 ended lower on Tuesday, reversing course late in the session after comments about a stalemate in talks over a fiscal stimulus deal.
The benchmark index had been higher for much of the session, coming within striking distance of its closing record high from February, before the onset of the U.S. coronavirus crisis that caused one of Wall Street’s most dramatic crashes in history.
U.S. Senate Republican leader Mitch McConnell told Fox News that White House negotiators had not spoken on Tuesday with Democratic leaders in the U.S. Congress on coronavirus aid legislation after talks broke down last week.
The Dow also ended down, and the Nasdaq fell more than 1% and underperformed the other major indexes, as investors continued to rotate out of technology-related market heavyweights and into value shares.
“We’re sitting here close to the all-time highs in the S&P 500, so any potential negative headline like that can cause a hiccup,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
Investors have been hoping Republicans and Democrats will resolve their differences and agree on another relief program to support about 30 million unemployed Americans, as the battle with the virus outbreak was far from over with U.S. cases surpassing 5 million last week.
Wedbush trader Joel Kulina said concerns about the stalemate in stimulus negotiations added to pressure to sell recently strong performing tech stocks.
“It just feels like an acceleration of the growth unwind that started last Friday. Today marks day three of the unwind out of growth,” Kulina said. “But I’m not seeing panicking.”
Unofficially, the Dow Jones Industrial Average fell 101.13 points, or 0.36%, to 27,690.31, the S&P 500 lost 26.14 points, or 0.78%, to 3,334.33 and the Nasdaq Composite dropped 182.74 points, or 1.67%, to 10,785.62.
On Tuesday, the Russell 1000 value index rose further, while the Russell 1000 growth index fell.
Ultra-low interest rates, trillions of dollars in stimulus and, more recently, a better-than-feared second-quarter earnings season have allowed all three of Wall Street’s main indexes to recover.
(Additional reporting by Noel Randewich in San Francisco, Medha Singh and Ambar Warrick in Bengaluru; Editing by Shounak Dasgupta, Anil D’Silva and Tom Brown)
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