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Wall Street eases after strong rally as virus cases surge

C Nivedita and Medha Singh
Updated ·3-min read
FILE PHOTO: A man wears a protective mask as he walks on Wall Street during the coronavirus outbreak in New York

By C Nivedita and Medha Singh

(Reuters) - The S&P 500 eased on Tuesday, a day after the benchmark index logged its longest streak of gains this year as investors weighed the risk of a sharp jump in new coronavirus cases nationwide hindering a rebound in economic activity.

The Nasdaq, on the other hand, claimed another record high, boosted by shares of technology heavyweights Microsoft Corp <MSFT.O> and Apple Inc <AAPL.O>. The Dow Industrials <.DJI> dropped 0.8%, weighed down by cyclical stocks including Goldman Sachs <GS.N> and Boeing Co <BA.N>.

Large parts of the country 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.

Bank <.SPXBK> stocks, whose performance is linked to the outlook for the economy, dropped 2.6%. Travel-related stocks, which were among the hardest hit during lockdowns, also fell. The S&P 1500 airlines index <.SPLCOMAIR> shed 3.7%.

"There's some signs of improvement in economic activity and there's concerns about rising cases in particular states. And all of that had the market kind of churning but not really find true direction," said Brian Levitt, global market strategist, Invesco in New York City.

The S&P 500 and Nasdaq have risen in the past five sessions 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 underway.

The benchmark S&P 500 and blue-chip Dow Industrials <.DJI> have risen about 45% from their March lows and are now about 6% and 11% from their record levels hit in February. The Nasdaq <.IXIC> reclaimed its record high last month.

The S&P 500 e-minis 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.

At 12:50 p.m. ET, the Dow Jones Industrial Average <.DJI> was down 199.94 points, or 0.76%, at 26,087.09, the S&P 500 <.SPX> was down 7.91 points, or 0.25%, at 3,171.81. The Nasdaq Composite <.IXIC> was up 24.30 points, or 0.23%, at 10,457.95.

Walmart Inc <WMT.N> jumped 4.3% after a report that the retailer is close to launching its membership program, a direct competitor for Amazon.com's <AMZN.O> Prime service. Amazon shares slipped 0.5%.

Gains for technology <.SPLRCT> and communications services <.SPLRCS> shares capped declines on the S&P 500.

Novavax Inc <NVAX.O> jumped 34.6% 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.

"There's a little bit of a quiet period before we move into the second quarter earnings reporting season," said Bill Northey, senior investment director, U.S. Bank Wealth Management in Minneapolis.

"Investors are looking beyond the outcome of 2020 into the recovery in earnings expected in 2021 and 2022."

Declining issues outnumbered advancers for a 2.11-to-1 ratio on the NYSE and for a 1.67-to-1 ratio on the Nasdaq.

The S&P index recorded 31 new 52-week highs and no new lows, while the Nasdaq recorded 80 new highs and 13 new lows.

(Reporting by C Nivedita and Medha Singh in Bengaluru; Editing by Rashmi Aich and Maju Samuel)