US stocks fell on Tuesday morning as tech stocks weighed on major indexes.
The S&P 500 slipped 1.2%. The benchmark index rose 0.3% on Monday, despite the drop in tech giant stocks. Nasdaq Composite technology fell 2.3%. The Dow Jones Industrial Average fell 0.8%, or 270 points.
Major indices were near record highs, with investors weighing strong economic data and strong corporate earnings against inflation concerns and rising coronavirus cases in parts of the world. Some fund managers say the improved outlook for the economy and corporate earnings has been built into the valuation of stocks.
“The market has already taken into account a strong recovery and an over-delivered earnings season, but that still hasn’t been enough to push the indices up much more,” said Sophie Chardon, multi-asset strategist at Lombard Odier . “The market is now focused on the next steps, especially on politics. The next step will be to see how the Fed changes its outlook for monetary policy. “
The improving economic situation is encouraging some investors to bet more on the companies that will benefit the most from the recovery. This is leading to a rebound in energy and banking stocks, while tech stocks have slowed their gains.
“Rotational trading is back and it will gain momentum in the coming weeks,” said Florent Pochon, head of cross-asset strategies at French bank Natixis..
“As long as central banks stay accommodating and you combine that with reopening the economy, that should be perfect momentum for stocks.”
After the opening bell, Pfizer rose 0.4%. The pharmaceutical giant reported higher profits in part thanks to sales of Covid-19 vaccines. CVS Health rose 2% after raising its earnings forecast and reporting higher earnings for the quarter.
Under Armor was down 1.6% after agreeing to settle a regulatory claim that it did not disclose it was withdrawing forward orders from future quarters.
T-Mobile US and Lyft earnings reports are due after market close.
Demand for products imported from the United States hit an all-time high in March, further increasing the trade deficit, the Commerce Department said on Tuesday. The gap in foreign trade in goods and services increased 5.6% from the previous month to reach $ 74.4 billion seasonally adjusted in March.
A second report showed new orders for manufactured goods rose 1.1% in March after declining in February.
US government bond yields fell for a third day in a row. The 10-year Treasury yield edged down to 1.583%, after 1.606% on Monday. Bond yields fall when prices rise.
Brent, the international oil benchmark, rose 1.8% to $ 68.79 a barrel amid optimism that demand is picking up in the United States and Europe.
Overseas, the pan-continental Stoxx Europe 600 index fell 0.6%. In Hong Kong, the Hang Seng index rose 0.7%. The markets in Japan and mainland China were closed on public holidays.
—Amber Burton contributed to this article.
Write to Will Horner at [email protected]
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