The S&P 500 fell on Tuesday, snapping a seven-day winning streak, as declines in some of the major tech names escalated at the end of the trading day. The broader market flirted with a new all-time high before the late-day sell-off.
The index closed 0.8% lower at 3,333.69 for its worst day since July 23. Earlier in the day, it was up as much as 0.6% and traded within half a percent of its Feb. 19 intraday record of 3,393.52.
Facebook and Amazon each fell more than 2% along with Microsoft. Apple and Netflix were down 3.4% and 3%, respectively. Alphabet dipped 1.1%. Those losses offset gains from shares that benefit from the economy reopening.
Gap shares were up more than 2% and Norwegian Cruise Line advanced 3.4%. Wynn Resorts and Simon Property also closed higher.
Both the S&P 500 and Dow traded higher earlier in the day after local news agencies reported Russian President Vladimir Putin claimed the country had given regulatory approval for the world's first Covid-19 vaccine.
While there was skepticism about whether Russia had developed a safe vaccine so quickly, the news triggered optimism from investors about the race for an inoculation and perhaps that the market isn't pricing in how quickly a valid one could be ready.
A Johnson & Johnson executive also told Reuters the company could produce 1 billion doses of its vaccine candidate if it proves to be successful.
"Markets are looking forward to better days ahead," Jeff Buchbinder, equity strategist at LPL Financial, said in a note. "Although the timing is uncertain, the stock market is expressing confidence that the pandemic will end eventually with a vaccine—or multiple vaccines—and with help from better treatments in the interim."
Goldman Sachs over the weekend raised its economic growth outlook, predicting at least one vaccine approved by the end of this year and widespread distribution of the drug by the second quarter of next year.
Dennis DeBusschere, quantitative strategist at Evercore ISI, also pointed out that coronavirus-related hospitalizations have seen a sharp drop recently. "Recovery stocks' returns have accelerated relative to Quarantine as net hospitalizations have collapsed. That will continue assuming vaccine trends remain positive and fiscal stimulus gets passed," he said.
Investors still grappled with the uncertain fate of further coronavirus stimulus aimed at supporting Americans struggling during the pandemic.
Treasury Secretary Steven Mnuchin said Monday the White House is open to resuming coronavirus aid talks with Democrats and putting more relief money on the table to reach a compromise. However, Senate Majority Leader Mitch McConnell said Tuesday negotiations with Democrats were at a stalemate.
Over the weekend, Trump signed four executive orders to extend some coronavirus aid, including unemployment benefits, a payroll tax holiday, defer student loan payments through 2020 and to extend federal eviction protections.
"Given the limited scope of the deal and the positive market reaction, equity investors continue to embed a likelihood that a larger agreement is reached," Mark Hackett, Nationwide's chief of investment research, said in a note on Monday.
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Correction: This story has been updated to reflect the S&P 500 closed at 3,333.69. A previous version of this story misstated the closing level.