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Wall Street ends lower after strong recent rally as COVID cases mount

Kitco News

Caroline Valetkevitch

(Reuters) - U.S. stocks eased on Tuesday as investors took profits a day after the S&P 500 logged its longest streak of gains this year and as new U.S. coronavirus cases rose further.

Large parts of the United States reported tens of thousands of new coronavirus infections. New York expanded its travel quarantine for visitors from three more states, while Florida’s greater Miami area rolled back its reopening.

The Nasdaq outperformed the other two main indexes and claimed another record intraday high before ending down on the day.

Strategists said investors may be taking profits after the recent run higher.

“It’s healthy to have some pullbacks. Even a more dramatic pullback would be good, just because I think there’s a lot of uncertainty and it’s kind of advanced on a wall of worry here,” said Alan Lancz, president, Alan B. Lancz & Associates Inc, an investment advisory firm, based in Toledo, Ohio.

“There’s probably more profit-taking and volatility in store on the down side after the incredible rebound from the March lows,” he said.

U.S. stocks have risen recently, with the S&P 500 registering a fifth straight session of gains on Monday, despite an alarming rise in coronavirus cases in the United States as a slew of upbeat data for June bolstered views that an economic recovery is under way.

Unofficially, the Dow Jones Industrial Average .DJI fell 396.5 points, or 1.51%, to 25,890.53, the S&P 500 .SPX lost 34.35 points, or 1.08%, to 3,145.37 and the Nasdaq Composite .IXIC dropped 89.76 points, or 0.86%, to 10,343.89.

“I’m looking at this simply as a digestion day where investors are sort of regrouping after yesterday’s nice, upward move, as well as the advance that we saw last week,” said Sam Stovall, chief investment strategist at CFRA Research in New York.

He noted that the forward price-to-earnings ratio on the market is now at a nearly 50% premium to the 20-year average, based on his data.

The S&P 500 is still up more than 40% from its March closing low.

Walmart Inc (WMT.N) gained after a report that the retailer is close to launching its membership program, a direct competitor for’s (AMZN.O) Prime service. Amazon shares slipped 1.3%.

Novavax Inc (NVAX.O) jumped as the U.S. government awarded $1.6 billion to the drugmaker to cover testing, commercialization and manufacturing of a potential coronavirus vaccine in the country.

Earlier, the S&P 500 e-minis EScv1 triggered a “golden cross” pattern on Tuesday, when the 50-day moving average crossed above the 200-day moving average, which could portend more gains for stocks in the short term.

Additional reporting by C Nivedita and Medha Singh in Bengaluru; Editing by Marguerita Choy and Maju Samuel

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