U.S. stocks fell from record levels on Tuesday as the recent rally driven by signs of strong economic rebound took a pause.
The Dow Jones Industrial Average dipped 96.95 points, or 0.3%, to 33,430.24. The S&P 500 fell 0.1% to 4,073.94, pressured by tech and health care. The tech-heavy Nasdaq Composite inched 0.1% lower to 13,698.38. The blue-chip Dow and the S&P 500 both closed at record highs in the prior session.
Shares of airlines and cruise lines continued their recent gains. Delta Air Lines rose 2.8%, while Carnival and Royal Caribbean both gained more than 1%. Norwegian Cruise Line jumped 4.6%.
The market came under pressure even after the Labor Department said U.S. job openings rose 268,000 to a two-year high of 7.4 million on the last day of February, according to its monthly Job Openings and Labor Turnover Survey, or JOLTS report. Economists polled by Dow Jones were expecting a total of 7 million.
Stocks rallied to record highs on Monday after Friday’s blowout jobs report and a surge in the gauge of services industry activity showed the economic rebound gained momentum amid accelerated vaccine rollout.
“Markets today are also still digesting a ‘trifecta’ of strong start-of-the-month reports,” Chris Hussey, a managing director at Goldman Sachs, said in a note. “But even on the back of all of this good news, with the S&P 500 already up 8.5% ytd, today is a time for markets to ‘consolidate’ as they await the next batch of news — 1Q21 earnings season.”
Big banks including JPMorgan and Goldman Sachs kick off the new earnings season next week. First-quarter earnings are expected to be up 24.2% year over year, compared to 3.8% growth in the fourth quarter, according to Refinitiv.
Bond yields continued to fall from recent highs, easing fears of rising inflation. The 10-year Treasury yield dropped 7 basis points to 1.65% on Tuesday.
On Tuesday, California Governor Gavin Newsom said that the state will reopen its economy by June 15 provided that coronavirus vaccine and hospitalization cases remain stable.
“Vaccinations are rolling out at a record clip, and historic stimulus efforts from Congress have all paved the way for continued positive market momentum,” said Chris Larkin, managing director of trading and investing product at E-Trade Financial.
Investors continue to assess President Joe Biden’s $2 trillion infrastructure proposal announced last week and its chance to become reality. While politicians on both sides of the aisle support funding to rebuild American roads and bridges, disagreements over the ultimate size of the bill and how to pay for it remain, including Biden’s plan to raise the corporate tax to 28%.
Biden said Monday he is not worried that a corporate tax hike would hurt the economy. Conservative Democrat Sen. Joe Manchin of West Virginia reportedly said he opposes the proposed tax hike to a level that high.