U.S. stocks indexes closed lower Tuesday, as investors monitored talks between Republicans and Democrats on a second coronavirus aid package and tuned in to a deluge of second-quarter corporate results.
How did major indexes fare?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.52% finished 205.49 points lower, or 0.8%, at 26,379.28, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +1.05% shed 20.97 points, or 0.7%, ending at 3,218.44, after briefly trading positive. The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +1.71% lost 134.18 points, or 1.3%, to close at 10,402.09.
The Dow on Monday finished with a gain of 114.88 points, or 0.4%, at 26,584.77, while the S&P 500 gained 23.78 points, or 0.74%, to close at 3,239.41. The Nasdaq Composite advanced 173.09 points to end at 10,536.27, a 1.7% gain.
What drove the market?
Stocks ended lower Tuesday as investors migrated toward businesses that may benefit from economic recovery after taking a hit from the global pandemic, but the gains were not enough to offset sharp selling in a number of high-profile companies.
Norwegian Cruise Line Holdings Ltd /zigman2/quotes/204183397/composite NCLH +2.27% and Regency Centers Corp. /zigman2/quotes/202056862/composite REG +0.13% , a shopping center real-estate investment trust, ended the day higher, as did American Airlines Group Inc . /zigman2/quotes/209207041/composite AAL +1.06% , United Airlines Holding Inc . /zigman2/quotes/205037281/composite UAL +0.83% and Delta Air Lines Inc . /zigman2/quotes/200327741/composite DAL +1.34% .
But stocks that already have done well from online shopping and work-from-home rules during the pandemic lost ground, including Netflix /zigman2/quotes/202353025/composite NFLX +0.78% and Alphabet /zigman2/quotes/205453964/composite GOOG +2.40% . Investors also sold shares of Dow components 3M Co. /zigman2/quotes/205029460/composite MMM +0.61% and McDonald’s Corp. /zigman2/quotes/203508018/composite MCD 0.00% , which reported second-quarter earnings that fell short of Wall Street expectations and pulled the Dow lower.
Still, the shift reinforced hopes that sentiment finally might start to shift toward value sectors and away from large-cap growth stocks that in recent months have been responsible for powering major equity indexes higher.
“One or two days is not a trend, but it’s welcome news for those who have owned value entities,” said Kent Engelke, chief economic strategist at Capitol Securities Management, in an interview.
Senate Republicans’ roughly $1 trillion coronavirus relief package also was in focus, as negotiations kicked off with Democrats over another fiscal stimulus bill that comes amid recent economic data suggesting the U.S. economic recovery is stalling.
A fight looms over supplemental unemployment benefits, with Democrats eager to maintain the existing $600 weekly supplement, while the Republican plan would reduce it to a $200 add-on through September. The supplemental jobless benefits are due to expire at the end of the month. Democrats and Republicans also want to issue another round of stimulus checks, but disagree on the details.
Analysts said the added jobless benefits have been credited with helping to cushion the economic blow of the COVID-19 pandemic.
“In our view, for equities to continue yesterday’s rebound, a common ground should be found before Friday when the enhanced unemployment benefits expire,” said Charalambos Pissouros, senior market analyst at JFD Group. Pissouros said a package near $1 trillion or lower would likely come as a disappointment to the market.
Meanwhile, the number of U.S. coronavirus cases rose to 4.29 million and the death toll hit 148,056. Texas became the fourth state with more than 400,000 cases, joining California, Florida and New York. The global tally for confirmed cases of COVID-19 climbed to 16.5 million on Tuesday, according to data aggregated by Johns Hopkins University, while the death toll rose to 654,327.
Aside from rising case counts, Major League Baseball also has become a harbinger of the nation’s attempts to contain the coronavirus, after 17 players from the Miami Marlins this week were reported as testing positive for COVID-19, forcing the team’s scheduled games to be suspended through Sunday .
“You listen to earnings and some have been particularly bad,” Jason Ader, chief executive officer of SpringOwl Asset Management, told MarketWatch. “But bad earnings aren’t the driver. Amazingly, there’s more focus on if there will be a baseball season or not.”