Major U.S. stock benchmarks closed with modest losses Tuesday, after the S&P 500 hit a record intraday high as investors weighed prospects for President Joe Biden’s $2.3 trillion infrastructure plan and a brightening outlook for the U.S. and global economy.
How are stock benchmarks performing?
The Dow Jones Industrial Average
was down 96.95 points, or 0.3%, to end at 33,430.24.
The S&P 500
fell 3.97 points, or 0.1%, to finish at 4,073.94, after trading as high as 4,081.37, taking out the intraday record of 4,083.42 set on Monday. The broad-based benchmark snapped its three-day winning streak.
The Nasdaq Composite
slipped 7.21 points, or less than 0.1%, to close at 13,698.38, ending its streak of three consecutive gains.
On Monday, the Dow rose 373.98 points, or 1.1%, to 33,527.19, marking its 18th record close of 2021, while the S&P 500 index ended 58.04 points, or 1.4%, higher to a record close at 4,077.91. The Nasdaq Composite Index ended up 225.49 points, or 1.7%, at 13,705.59, off 2.8% from its Feb. 12 record close.
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What drove the market?
Equities teetered between small gains and losses throughout Tuesday, a day after the S&P 500 and Dow closed at records, as investors focused on the prospect of further fiscal support and increased corporate taxes.
The nonpartisan Senate parliamentarian on Monday ruled in favor of a Democratic effort to pass additional legislation through a process called reconciliation, which could pave the way for Democrats to approve President Joe Biden’s $2.3 trillion infrastructure bill.
However, Joe Manchin, Democratic Senator for West Virginia, said he wouldn’t support raising the corporate tax rate to 28% from 21% as proposed by Biden to fund the infrastructure package, Axios reported. Manchin’s stance suggests that infrastructure’s passage could still face challenges within its own party despite the use of the reconciliation procedure.
“With a watered down package, that tax increase gets maybe to 3% to 4%. I think the market can swallow that considering some of the upside from the economic recovery,” said Jack Janasiewicz, portfolio manager at Natixis Investment Managers, in an interview.
Analysts say the infrastructure plan is seen as a much-needed measure to rebuild aging U.S. roads, bridges, tunnels and airport, as well as invest in broadband internet, fortify power and water supplies, and prepare for climate change.
The International Monetary Fund on Tuesday raised its forecasts for U.S. and global economic growth. The IMF raised its U.S. outlook sharply in 2021 to 6.4% this year from 5.1%. The U.S. should see solid 4.4% growth in 2022.
The IMF raised its estimate for global growth to 6% this year and 4.4% next year. This represents an upgrade of 0.5% for 2021 and 0.2% for 2022 from what it forecast in January. Gita Gopinath, the IMF’s economic counsellor, said “a way out of this health and economic crisis is increasingly visible.”
Separately, details of the fallout from the implosion of Archegos Capital Manangement, run by Bill Hwang, who failed to meet margin calls after making highly leveraged bets on a handful of stocks, was still emerging.
Credit Suisse Group AG
said it would take a $4.7 billion charge and a nearly $1 billion loss. The Swiss bank said it would cut its dividend and announced the departure of two executives Brian Chin, investment banking head, and chief risk and compliance officer Lara Warner.
On the data front, job openings in the U.S. jumped to 7.37 million in February from 7.1 million a month earlier, the Labor Department said. That’s the highest level in more than two years.
Which companies were in focus?
- Shares of Illumina Inc. ILMN were in focus after the biotech company late Monday said it expects first-quarter revenue to top $1 billion thanks to “record” orders and revenue growth in its gene-sequencing and related businesses. Shares rose 7.9%.
- Novavax Inc. NVAX said late Monday that it plans to expand its COVID-19 vaccine trials to include children and teens by the second quarter. Shares closed up 0.8%.
Shares of Opera Ltd.
surged 5.8%, after the Norway-based web browser company said it expects first-quarter revenue to exceed previously provided guidance.
Carnival Corp.’s Carnival Cruise Line
said Tuesday it was notifying its guests of cruise cancellations, as the suspension of all operations from U.S. ports has been extended through June 30. Carnival’s shares gained 1.7%.
What did other markets do?
The ICE U.S. Dollar Index
a measure of the currency against a basket of six major rivals, fell 0.3%.
The yield on the 10-year Treasury note
declined 6.2 basis points to 1.656%. Yields and bond prices move in opposite directions.
Oil futures bounced, with the U.S. benchmark
up 68 cents, or 1.2% to settle at $59.33 a barrel.
Gold futures edged higher, with the June contract
gaining $14.20, or 0.8%, to settle at $1,743 an ounce.
In Europe, the Stoxx 600 index
rose 0.7%, while London’s FTSE 100
In Asia, the Shanghai Composite
ended fractionally lower, while Japan’s Nikkei 225