US stocks fell from record levels on Tuesday as the recent rally, driven by signs of a strong economic recovery, paused.
The Dow Jones Industrial Average fell 96.95 points, or 0.3%, to 33,430.24. The S&P 500 fell 0.1% to 4,073.94, put under pressure by technology and healthcare. The tech-heavy Nasdaq Composite fell 0.1% to 13,698.38. The blue chip Dow and S&P 500 both closed at record highs in the previous session.
Airline and cruise company stocks continued their recent gains. Delta Air Lines grew 2.8%, while Carnival and Royal Caribbean both grew more than 1%. Norwegian Cruise Line rose 4.6%.
The market came under pressure even after the Department of Labor announced that US job vacancies rose 268,000 on the last day of February to a two-year high of 7.4 million. This is the result of the monthly survey on job vacancies and turnover (JOLTS). Economists polled by Dow Jones expected a total of 7 million.
Stocks rallied to record highs on Monday following Friday’s blowout jobs report, and a surge in service industry activity showed that the economic recovery was gaining momentum amid the accelerated adoption of vaccines.
“The markets are still digesting a ‘trifecta’ of strong reports at the start of the month,” said Chris Hussey, chief executive officer at Goldman Sachs, in a note. “But even with all this good news, with the S&P 500 already up 8.5%, today is a time for markets to ‘consolidate’ as they await the next piece of news – earnings season for the first quarter of 21. “
Big banks like JPMorgan and Goldman Sachs are kicking off the new earnings season next week. First quarter earnings are expected to grow 24.2% year over year, compared to a 3.8% increase in the fourth quarter, according to Refinitiv.
Bond yields continued to fall from recent highs, allaying fears of rising inflation. The 10-year Treasury yield fell 7 basis points to 1.65% on Tuesday.
On Tuesday, California Governor Gavin Newsom said the state would reopen its economy by June 15, provided coronavirus vaccine cases and hospitalizations remain stable.
“The vaccinations are being rolled out at a record high, and the historic economic effort by Congress has paved the way for continued positive market momentum,” said Chris Larkin, chief executive officer, trading and investing products, E-Trade Financial.
Investors continue to evaluate President Joe Biden’s $ 2 trillion infrastructure proposal announced last week and its chance to materialize. While politicians on both sides of the aisle support funding to rebuild American roads and bridges, disagreements persist over the ultimate bill and how to pay, including Biden’s plan to raise corporate tax to 28%.
Biden said Monday he was not concerned that a corporate tax hike would harm the economy. West Virginia Conservative Democratic Senator Joe Manchin reportedly said he was opposed to the proposed tax hike to such a high level.