The 30-stock Dow closed 170.37 points lower, or 0.7%, at 26,119.61. The S&P 500 dipped 0.4% to 3,113.49. Both the Dow and S&P 500 swung between gains and losses throughout the session. The tech-heavy Nasdaq Composite outperformed, rising 0.15% to 9,910.53.
Airlines, cruise operators and retail — all groups that would benefit from the economy reopening — were under pressure on Wednesday. United and Delta fell more than 1.8% each while American Airlines dropped 0.3%. Carnival, Norwegian Cruise Line and Royal Caribbean all slid more than 6%. Nordstrom fell 5.5% and Gap lost 5.4%. Those stocks initially took a beating after the coronavirus pandemic began. In recent weeks, though, they have led the broader market higher.
Wednesday's losses came amid lingering concerns over the coronavirus. Beijing has also canceled several domestic flights in order to curb the spread. On Tuesday, multiple report said China's capital city shut down all schools amid a resurgence in coronavirus cases. In the U.S., more than 2.1 million cases have been confirmed, with states such as Arizona and Texas reporting a spike in cases.
Longtime investor Jeremy Grantham told CNBC's "Closing Bell" he would advise investors to get out of U.S. equities, noting: "My confidence is rising quite rapidly that this is the fourth 'Real McCoys' bubble of my investment career." The previous three bubbles Grantham referred to were Japan in 1989, the tech bubble in 2000 and the housing crisis of 2008.
"We've now reached a level where you buy bankrupt companies and you issue stock in bankrupt companies that will probably be used to pay off the bondholders," said Grantham, possibly referring to car-rental company Hertz. "This is crazy stuff."
Big Tech outperformed on Wednesday. Alphabet advanced 0.4%. Amazon and Netflix rose 1% and 2.7%, respectively. Apple shares rose as much as 0.9% to hit an all-time high before closing slightly lower.
Stocks were coming off sharp gains on Tuesday, helped by a bevy of bullish news, including a historic jump in retail sales. The U.S. government reported a record 17.7% increase in retail sales for May.
Federal Reserve Chairman Jerome Powell testified before House members on Wednesday, noting the central bank will move away from corporate bond ETFs in favor of direct corporate-bond purchases. "It's a better tool for supporting liquidity and market functioning," he said.
In front of the Senate Banking Committee on Tuesday, Powell warned of "significant uncertainty" about the economic recovery, adding small businesses are at risk following the pandemic.
The S&P 500 has rallied more than 40% since hitting an intraday low on March 23.
"We're likely due for a period of consolidation as we work off techincally overbought conditions," said Bill Northey, senior investment director at U.S. Bank Wealth Management.
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