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Major U.S. stock indexes finished Tuesday mostly in record territory, despite ongoing wrangling in Congress over further coronavirus aid and concerns about how the economy will fare when an unprecedented raft of fiscal stimulus eventually burns off.
How did major stock indexes fare?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.59% slipped 66.84 points, or 0.2%, to close at 27,778.07. The S&P 500 index /zigman2/quotes/210599714/realtime SPX -1.21% gained 7.79 points, or 0.2%, finishing at a record 3,389.78, its first all-time closing high since Feb. 19. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -2.45% added 81.84 points to reach 11,210.84, also a record close and its 34th of the year.
On Tuesday, the Dow fell 86.11 points, or 0.3%, to end at 27,844.91, or 5.8% away from its record close. The S&P 500 rose 9.14 points, or 0.3%, closing at 3,381.99, only 0.1% away from its record closing peak at 3,386.15. The Nasdaq Composite Index added 110.42 points, or 1%, finishing at 11,129.73, while booking its 33rd record close of the year.
What drove the market?
The S&P 500 notched a fresh record close on Tuesday, setting a new high-water mark for an index that tracks many of the nation’s biggest corporations.
Despite continuing concerns about the trajectory of the pandemic, the shape of the economic recovery and political turmoil in the U.S., it also marked the S&P 500’s quickest turnaround from bear-market territory in history, according to Dow Jones Market Data.
“Our feeling is that a good deal of the easy lifting is behind us,” said Michael Hans, chief investment officer at Clarfeld Citizens Private Wealth, after the S&P 500 also briefly carved out its first intraday record since Feb. 19.
“We have a resilient consumer, and benchmarks are back to all-time highs,” he told MarketWatch, but also added that it’s unclear what improvements in consumer spending, the labor markets and economic activity can be sustained without ongoing monetary and fiscal support.
“The expectation is that policy will not be in place forever,” he said.
Two of the nation’s biggest retailers reported second-quarter results that beat expectations, giving stock benchmarks a temporary boost. Shares of Walmart Inc. and Home Depot Inc. /zigman2/quotes/208081807/composite HD -1.08% briefly surged to record territory, but closed lower.
Many retailers have been leveled by business closures imposed due to the COVID-19 pandemic, although Home Depot and Walmart have found some support from consumers focusing on home-improvement projects and general shopping needs. Walmart sells about 25% of all groceries bought in the U.S. and its results have been boosted by its partnership with Instacart, an internet startup for grocery deliveries.
In economic reports, U.S. home builders began construction on homes at a seasonally-adjusted annual rate of 1.496 million in July, up 22.6% from the previous month and 23.4% from a year ago, the U.S. Census Bureau reported Tuesday, underscoring a powerful turnaround for coronavirus-stricken market.
Increases in both single-family and multifamily starts contributed to the increase. Permitting activity occurred at a seasonally-adjusted annual rate of 1.495 million, up 18.8% from June and 9.4% from July 2019.
Chris Zaccarelli, chief investment officer at Independent Advisor Alliance, pointed to the “massive amounts of liquidity that the Federal Reserve has injected into the system” as a catalyst for “the stunning recovery that we have just witnessed,” in emailed commentary, that also warned of numerous headwinds, including high unemployment, that could drag on the market.