By William Watts and Sunny Oh
Major U.S. stock benchmarks closed with modest losses Tuesday, after the S&P 500 hit a record intraday high as investors weighed prospects for President Joe Biden’s $2.3 trillion infrastructure plan and a brightening outlook for the U.S. and global economy.
How are stock benchmarks performing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +1.06% was down 96.95 points, or 0.3%, to end at 33,430.24.
The S&P 500 /zigman2/quotes/210599714/realtime SPX +1.49% fell 3.97 points, or 0.1%, to finish at 4,073.94, after trading as high as 4,081.37, taking out the intraday record of 4,083.42 set on Monday. The broad-based benchmark snapped its three-day winning streak.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +2.32% slipped 7.21 points, or less than 0.1%, to close at 13,698.38, ending its streak of three consecutive gains.
On Monday, the Dow rose 373.98 points, or 1.1%, to 33,527.19, marking its 18th record close of 2021, while the S&P 500 index ended 58.04 points, or 1.4%, higher to a record close at 4,077.91. The Nasdaq Composite Index ended up 225.49 points, or 1.7%, at 13,705.59, off 2.8% from its Feb. 12 record close.
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What drove the market?
Equities teetered between small gains and losses throughout Tuesday, a day after the S&P 500 and Dow closed at records, as investors focused on the prospect of further fiscal support and increased corporate taxes.
The nonpartisan Senate parliamentarian on Monday ruled in favor of a Democratic effort to pass additional legislation through a process called reconciliation, which could pave the way for Democrats to approve President Joe Biden’s $2.3 trillion infrastructure bill.
However, Joe Manchin, Democratic Senator for West Virginia, said he wouldn’t support raising the corporate tax rate to 28% from 21% as proposed by Biden to fund the infrastructure package, Axios report ed. Manchin’s stance suggests that infrastructure’s passage could still face challenges within its own party despite the use of the reconciliation procedure.
“With a watered down package, that tax increase gets maybe to 3% to 4%. I think the market can swallow that considering some of the upside from the economic recovery,” said Jack Janasiewicz, portfolio manager at Natixis Investment Managers, in an interview.
Analysts say the infrastructure plan is seen as a much-needed measure to rebuild aging U.S. roads, bridges, tunnels and airport, as well as invest in broadband internet, fortify power and water supplies, and prepare for climate change.
The International Monetary Fund on Tuesday raised its forecasts for U.S. and global economic growth. The IMF raised its U.S. outlook sharply in 2021 to 6.4% this year from 5.1%. The U.S. should see solid 4.4% growth in 2022.
The IMF raised its estimate for global growth to 6% this year and 4.4% next year. This represents an upgrade of 0.5% for 2021 and 0.2% for 2022 from what it forecast in January. Gita Gopinath, the IMF’s economic counsellor, said “a way out of this health and economic crisis is increasingly visible.”
Separately, details of the fallout from the implosion of Archegos Capital Manangement , run by Bill Hwang, who failed to meet margin calls after making highly leveraged bets on a handful of stocks, was still emerging.
Credit Suisse Group AG /zigman2/quotes/202835784/composite CS +1.65% said it would take a $4.7 billion charge and a nearly $1 billion loss. The Swiss bank said it would cut its dividend and announced the departure of two executives Brian Chin, investment banking head, and chief risk and compliance officer Lara Warner.