S&P 500 hits 7-day winning streak, Dow drops 200 points

Stocks stumbled Tuesday as Wall Street kicked off its holiday-shortened week with concerns that perhaps the best of the economic recovery from the pandemic is behind us.

The Dow Jones Industrial Average fell 208.98 points to 34,577.37, swept by losses in Dow Inc., Caterpillar, JPMorgan and Chevron. The S&P 500 fell 0.2% to 4,343.54 after hitting an all-time high at opening. The 500-stock index posted a seven-day winning streak, the longest since August. The Nasdaq Composite rose 0.17% to 14,663.64, closing on a new record. U.S. markets were closed Monday for the 4th of July Independence Day.

Amazon rose 4.7% after the Department of Defense canceled its $10 billion JEDI cloud contract with Microsoft. Instead, the department is launching a new contract and soliciting proposals from both Amazon and Microsoft. In addition, Andy Jassy officially took over as CEO of Amazon on Monday. Jeff Bezos is now the executive chairman of the board.

Investors are juggling several signals that rapid economic growth from the depths of the pandemic could peak. The ISM Services Index, a key indicator of the services sector, slowed to 60.1 in June from a record the previous month, data released Tuesday showed. Economists polled by Dow Jones were expecting a figure of 63.5. This follows Friday’s jobs report, which showed the unemployment rate rose again to 5.9%, against the expectation of 5.6%.

Bond yields also fell on Monday, with 10-year Treasury yields falling below 1.4%, further evidence that investors are doubting the strength of the US economy.

Many on Wall Street expect smaller and more choppy gains for the remainder of the year after a strong first half performance amid a historic economic reopening. The S&P 500 is up nearly 16% so far.

“The US economy is booming, but this is now known and asset markets are reflecting it. What is not so clear anymore is at what price this growth will happen,” Michael Wilson, chief strategist for US equities at Morgan Stanley, said in a statement. . a note. “Higher costs mean lower profits, another reason why the overall stock market has tightened… the stock markets are likely to take a break this summer as things warm up.”

Wall Street’s year-end consensus target for the S&P 500 stands at 4,276, a loss of nearly 2% from the current level of the 500 stock, according to the CNBC Market Strategist Survey, which forecasts of 16 top strategists.

“Everything is perfect and that worries me,” Sarat Sethi, portfolio manager at DCLA, said on CNBC’s “Squawk Box” Tuesday. “Since October, we’ve had a 5% correction, that’s it. I think we have a little bit of euphoria in the short term. We have to be careful and I think you want to be in secular growth. chasing the market because I think the market will be very picky in which sectors are going to do well.”

Citi analysts told clients they are concerned about central bank policies and may see earnings reports, which start in a few weeks, fall short of expectations. They suggest July could be “a troubling month” due to “higher inherent expectations” following such strong first-quarter reports.

U.S. shares of Chinese ride-hailing giant Didi plunged nearly 19.6% after China said new users would not be able to download the app until it conducted a cybersecurity assessment. The announcement took markets by surprise, as Didi just made his US debut on the NYSE last week.

West Texas Intermediate crude oil rose to a six-year high after a major meeting between oil producer group OPEC and its partners over crude oil production policy was called off. The postponement came when the United Arab Emirates rejected a proposal to extend the increase in oil production by a second day. At one point on Tuesday, WTI oil hit a high of $76.98, which was its highest price since November 2014, after pulling out of the opening bell. WTI settled at $73.37.

Investors await the release of the minutes of the June Federal Open Market Committee meeting, expected Wednesday, for clues about the central bank’s behind-the-scenes discussions about phasing out its quantitative easing program.