By William Watts and Sunny Oh
U.S. stocks ended mostly lower on Tuesday, capping a turbulent session that saw markets swing between small gains and losses, as momentum for a record-setting market rally slowed.
Investors were focused on the potential for another round of government spending to boost the economic recovery from the coronavirus pandemic.
What did major benchmarks do?
The Dow Jones Industrial Average /zigman2/quotes/210407078/delayed YM00 +0.08% /zigman2/quotes/210598065/realtime DJIA +0.66% fell 9.93 points, or less than 0.1%, to end at 31,375.83, after setting an intraday record of 31,439.47.
The S&P 500 /zigman2/quotes/210599714/realtime SPX +0.74% closed down 4.36 points, or 0.1%, at 3,911.23, after recording an all-time intraday high of 3,918.35.
The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.88% rose 20.06 points, or 0.1%, to end at 14,007.70, a new all-time closing high.
The Russell 2000 /zigman2/quotes/210598147/delayed RUT +1.35% rose 0.4% to carve out a new record.
Stocks saw moderate gains Monday, pushing the Dow to its first record close since Jan. 20 , while the S&P 500 and Nasdaq Composite each scored a third straight record finish. The small-cap Russell 2000 /zigman2/quotes/210598147/delayed RUT +1.35% led gains, rising 2.5% to its own record close.
What drove the market?
The rally in equities lost some steam Tuesday, after surging to a series of new highs in recent days, helped by good earnings reports, progress in Congress on President Joe Biden’s fiscal relief plan and the accelerating rollout of coronavirus vaccines, along with declining new case numbers, analysts said.
President Joe Biden and congressional Democrats are preparing to push a another fiscal stimulus package through the Senate via a process known as budget reconciliation that would require a simple majority, likely meaning a package closer in size to Biden’s $1.9 trillion proposal.
Biden said on Tuesday he was in support of sending $1,400 stimulus payments to households earning up to $75,000 annually.
“Razor thin majorities in the House and Senate mean that Biden will not have full rein to pursue the more expansive aspects of his campaign. That said, a lot can get done through the budget reconciliation process,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments.
Meanwhile, the U.S. averaged 111,190 new coronavirus cases a day in the past week, down 36% from the average two weeks ago. Hospitalizations also have been falling, according to the COVID Tracking Project . There were 80,055 COVID-19 patients in U.S. hospitals on Sunday, down from 81,439 a day earlier and the lowest level since Nov. 18.
The focus on additional spending and optimism over vaccine rollouts has been positive for cyclical stocks tied more closely to the economic cycle.
“The brighter outlook for U.S. economic activity likely explains why value and ‘old economy’ stocks are spearheading this latest charge higher, while the stay-at-home tech heavyweights like Amazon, Facebook and Apple have fallen behind,” said Marios Hadjikyriacos, investment analyst at XM, in a note.