NEW YORK:U.S. stocks fell from record highs on Tuesday in choppy trading, as investors worried about the path of reopening the economy and whether the Senate would approve additional pandemic aid checks.
U.S. Senate Majority Leader Mitch McConnell said the chamber would address this week President Donald Trump’s call for an increase in stimulus payments from $600 to $2,000, after blocking an immediate consideration of the measure on Tuesday. Final passage of the proposal would require 60 votes and the backing of a dozen Republicans.
McConnell’s comment comes a day after Democratic-led House of Representatives approved the move to bump up direct payments.
“On a motion like that they are going to follow the leader,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
Massocca said he thought McConnell would “put something unappetizing in there and the whole thing is going to fall apart, I don’t think the $2,000 is going to happen.”
The Dow Jones Industrial Average fell 101.76 points, or 0.33%, to 30,302.21, the S&P 500 lost 9.84 points, or 0.26%, to 3,725.52 and the Nasdaq Composite dropped 57.54 points, or 0.45%, to 12,841.89.
Volumes are expected to be light in the holiday-shortened week, which could lead to volatility.
Wall Street’s three main indexes opened at new highs for a second straight session after Trump signed a $2.3 trillion fiscal bill that restored jobless benefits and averted a federal government shutdown.
Meanwhile, more than 2 million Americans have been inoculated, helping investors looked past a surge in infections that topped 19 million, with California, a major U.S. virus hot spot, likely to extend strict stay-at-home orders.
But a sharp drop in small cap stocks could be a reflection of the concern surrounding the surge in infections leading to a slower than hoped for reopening, according to Massocca. The Russell 2000 small cap index was off 2.23%, on pace for its biggest daily percentage drop in two months.
Unprecedented monetary and fiscal stimulus measures, along with positive vaccine developments have helped the S&P 500 bounce back from a virus-fueled crash in March.
The benchmark index is up more than 10% for the quarter as investors have flocked to economically-sensitive stocks from the so called ‘stay-at-home’ plays on hopes of a recovery.
Intel Corp jumped 4.28% after Reuters reported activist hedge fund Third Point LLC is pushing the chipmaker to explore strategic options, including whether it should remain an integrated device manufacturer. [nL1N2J9139]
Boeing shares gave up earlier gains and slipped 0.21% as its 737 MAX plane resumed passenger flights in the United States for the first time after a 20-month safety ban was lifted last month.
Snapchat owner Snap Inc climbed 5.02% after Goldman Sachs raised its price target on the stock on upbeat revenue growth prospects.
Declining issues outnumbered advancing ones on the NYSE by a 2.09-to-1 ratio; on Nasdaq, a 3.17-to-1 ratio favored decliners.
The S&P 500 posted 21 new 52-week highs and no new lows; the Nasdaq Composite recorded 76 new highs and 25 new lows.
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