The S&P 500 got within striking distance of reclaiming its all-time high but turned tails late in the session Tuesday to close lower. Comments from Senate Majority Leader Mitch McConnell about a stalemate in talks over a fiscal stimulus deal sank stocks.
Economically sensitive stocks like financials and industrials rose but red-hot tech stocks cooled.
O’Neil Global Advisor’s Randy Watts says this leadership rotation is good for the markets.
“A lot of the laggard groups like energy, like financials, like industrials, and like cyclicals are starting to do well. The leadership stocks that had primarily been healthcare and technology are kind of basing out and going sideways. That’s actually healthy technical action for the market.”
The Dow fell four-tenth percent, the S&P lost eight-tenths percent, and the Nasdaq dropped 1.7%.
Investors sold safe haven assets like gold and treasuries, driving yields higher. Those rising yields helped spur purchases of shares of big banks like JPMorgan Chase, Bank of America and Citigroup.
Stocks that would benefit from a full reopening of the economy bolted higher such as cruise lines Royal Caribbean, Norwegian and Carnival.