The S&P 500 index and the Dow walked back from record closing highs, pulled lower by cyclicals and small caps that drove the rally earlier in the week.
The S&P 500 index closed lower on Wednesday as mounting United States layoffs in the wake of new mandated lockdowns to contain surging COVID-19 infections dampened investors’ appetite for risk.
The index and the Dow Jones Industrial Average retreated from record closing highs, pulled lower by cyclicals and small caps that drove the rally earlier in the week.
Pandemic-resilient tech and tech-adjacent market leaders helped keep the Nasdaq afloat.
“It’s a growth day, flipping back the other way away from value,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “It’s this ongoing struggle between the virus and the vaccine.”
“There’s a reality setting in that while the vaccine will start being distributed fairly quickly, the virus isn’t going away quickly and therefore the timeline for economic improvement is getting pushed out.”
A wide range of data released in advance of Thursday’s Thanksgiving holiday was dominated by a second consecutive week of unexpected jobless claims increases, suggesting that new restrictions to combat spiking coronavirus cases could hobble the struggling labour market’s recovery.
“The economic data is not good, and we know it won’t be good for some time given this new wave of the virus,” Ghriskey added.
The market appeared to be replaying the previous two weeks, which began with rallies driven by promising vaccine news but pivoted back to stay-at-home plays on near-term pandemic realities and the lack of new fiscal stimulus measures.
Still, the vaccine developments and removal of uncertainties surrounding the US presidential election have driven Wall Street indexes to record closing highs, and put the S&P 500 on course for its best November ever.
Market participants believe US stocks have more room to climb. A recent Reuters news agency poll showed analysts believe the S&P 500 will gain 9 percent between now and the end of 2021. The index has surged about 66 percent since the coronavirus-led crash in March and is up about 12 percent so far this year.
The Dow Jones Industrial Average fell 173.77 points, or 0.58 percent, to 29,872.47; the S&P 500 lost 5.76 points, or 0.16 percent, to 3,629.65; and the Nasdaq Composite Index added 57.08 points, or 0.47 percent, at 12,094.40.
Of the 11 major sectors of the S&P 500, seven ended the session in the red, with energy suffering the largest percentage loss.
The economically sensitive banking sector lost ground, with the S&P 500 Banks index shedding 0.7 percent.
Tesla Inc, which surpassed $500bn in market capitalization on Tuesday, extended its gain by 3.4 percent even after the electric-car maker recalled about 9,500 vehicles.
The company also plans to start manufacturing electric vehicle chargers in China starting next year, according to documents it submitted to Shanghai authorities.
Declining issues outnumbered advancers on the New York Stock Exchange by a 1.24-to-1 ratio; on Nasdaq, a 1.01-to-1 ratio favoured decliners.
The S&P 500 posted 15 new 52-week highs and no new lows; the Nasdaq recorded 120 new highs and eight new lows.
Volume on US exchanges was 10.76 billion shares, compared with the 11.17 billion average over the last 20 trading days.
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