U.S. stocks bumped lower on Tuesday, erasing early gains and putting the market on track for its worst session of 2017. The S&P 500 and the Dow are also at risk of falling for a fourth session, which would be the longest losing streak since November.
Markets had opened higher, with all 11 S&P 500 sectors rising on the day, but the mood soured as some of Wall Street’s biggest recent gainers, including financial and industrial stocks, led the way south. Only two sectors were positive in midday trading, utilities, which is often seen as a defensive play, and consumer staples.
The Dow Jones Industrial Average
fell 151 points, or 0.7%, to 20,755, while the S&P 500
lost 18 points, or 0.8%, to 2,354. The Nasdaq Composite Index
lost 66 points, or 1.1%, to 5,834. The Nasdaq had hit an intraday record of 5,928.06 in early trading before turning negative.
“I think that investors are kind of starting to discount the likelihood of the immediacy of [President Donald Trump’s] policies and the enthusiasm has come off the boil as a lot of his policies got mired in legislative process,” said Jack Ablin, chief investment officer at BMO Private Bank. “Investors are not throwing in the towel but they are resetting their expectations.”
The day’s weakness extended the modest downtrend that stocks have been in recently. Of the 16 trading days thus far in March, including Tuesday, the S&P 500 has been lower in 10 of them, including in five of the past six sessions. The benchmark index’s current losing streak is its longest since early November, going into the U.S. presidential election.
“We tried to bounce off yesterday’s lows, but there was no follow-through. This doesn’t feel like a sell-off, though, at least not at this point. I think the markets might have a little vertigo, so there’s some profit taking and consolidation, which isn’t to say things look very weak,” said Steve Sosnick, equity-risk manager at Timber Hill/Interactive Brokers Group.
“The main issue is positioning…. Everyone is crowded into the same trades and the unwind of these consensus trades has accelerated throughout the day,” Ian Winer, head of equities at Wedbush Securities, said in a note to investors. “Clearly the healthcare bill needs to get done, because the market is betting on a tax overhaul. But today, it just feels like an old fashioned unwind.”
Despite the recent move lower, equities have been in a pronounced uptrend for months, up more than 10% since the U.S. election. Investors are betting that the policies Trump is expected to pursue, including on taxes and regulation, will accelerate economic growth and boost corporate profits. While some analysts are calling for a near-term pullback, especially amid few details about what Trump’s policies could look like, the market’s upward momentum is expected to remain intact as the economy continues to expand and employment remains strong.
“Clearly improving global growth and inflation momentum in the coming quarters” are among the factors that “favor a further reallocation from bonds into equities and other growth-related assets,” wrote Société Générale’s head of global asset allocation, Alain Bokobza, and his colleagues, in a note dated Tuesday.
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also jumped against the buck as data showed U.K. inflation rose to 2.3% in February, the highest level since 2013. More broadly, a key dollar index
was losing ground.
Traders will be looking for further detail surrounding a glitch that snarled closing trading in dozens of exchange-traded funds late Monday at the New York Stock Exchange’s Arca platform, in one of the largest trading disruptions of 2017.
Home-builder Lennar Corp.
fell 2.4% despite its quarterly earnings came in slightly better than expected.
Economic news: Kansas City Fed President Esther George was slated to give a speech on the economy at an event in Washington, D.C., at noon Eastern Time. The Cleveland Fed’s Loretta Mester and the Boston Fed’s Eric Rosengren are both expected to speak after the closing bell.
New York Fed President William Dudley spoke early Tuesday in London, saying banks have a “long way to go” in reforming their corporate culture, according to a Reuters report.
–Victor Reklaitis contributed to this report.