U.S. stocks fell on Tuesday, one year after the bull market from the pandemic lows began, as investors took some profits in shares that will benefit the most from the reopening of the economy.
The S&P 500 dipped 0.3% and the Dow Jones Industrial Average fell 130 points. The tech-heavy Nasdaq Composite slid 0.5%.
Shares of Carnival and Norwegian cruise lines fell about 5% each. American Airlines and United Airlines dropped more than 4% apiece. Brick-and-mortar retailer Gap also fell over 2%.
ViacomCBS, one of the top performers in the S&P 500 since the pandemic lows, lost 3% after saying it would offer more stock for sale. The shares are up more than 700% since last March.
Tuesday marks the one-year anniversary of the bull market after stocks rebounded fiercely from the bottom. The coronavirus pandemic sent the S&P 500 tumbling 30% in just 22 days last year in the fastest bear market sell-off on record. Since the low on March 23, the S&P 500 has rallied about 80%, marking the best start to a new bull market ever. The Nasdaq Composite is up more than 90%, while the Dow has surged about 75%.
“Things have come full circle now, as stocks have staged a furious rally, with new highs happening across the globe as the economy recovers at a record pace,” noted Ryan Detrick, chief market strategist at LPL Financial.
“This bull market is off to an amazing start, but it is important to remember it is still young. While a pick-up in volatility would be normal as this stage of a strong bull market, we think suitable investors may want to consider buying the dip,” he added.
History shows that new bull markets like this one usually carry the strong rally into the second year, although the road ahead will be choppier and more muted gains should be expected.
Wall Street’s consensus year-end target for the S&P 500 stands at 4,099, representing a 4% gain from Monday’s close of 3,940.59, according to the CNBC Market Strategist Survey that rounds up 15 top strategists’ forecasts.
“After an 80% rebound in equity prices since the lows of March 2020, it is fair to suggest that much of the good news is getting priced in and the upside potential becomes more limited from here,” Tobias Levkovich, chief U.S. Equity Strategist at Citi, said in a note.
On the pandemic front, a U.S. health agency expressed concern Tuesday that AstraZeneca may have included outdated information in trial results of its Covid-19 vaccine.
The U.S. is administering about 2.5 million Covid vaccine shots every day. However, the number of new cases is increasing in 21 states as highly infectious variants spread and governors relax restrictions on businesses.
Federal Reserve’ Chairman Jerome Powell and Treasury Secretary Janet Yellen will make their first joint appearance Tuesday before the U.S. House Committee on Financial Services. The discussion will center on the oversight of the Treasury’s and Fed’s pandemic response.
In prepared remarks published ahead of the hearing, Powell noted that the recovery is gaining steam, before adding there’s still a long way to go.
“The recovery has progressed more quickly than generally expected and looks to be strengthening. This is due in significant part to the unprecedented fiscal and monetary policy actions … which provided essential support to households, businesses, and communities,” he said in the prepared comments.
“But the recovery is far from complete, so, at the Fed, we will continue to provide the economy the support that it needs for as long as it takes,” he added.
The major indexes finished Monday higher as investors bought the dip in growth stocks with the 10-year Treasury yield retreating. The benchmark rate dipped another 2 basis points to 1.65% on Tuesday.
