Tuesday’s Stock Market Close: US Equities Drop As Tech Rally Dissipates, Covid-19 Worries Deepen

U.S. stocks tumbled on Tuesday as recent rally took a pause one day after strength in tech shares drove Nasdaq to record highs.

The Dow Jones Industrial Average dropped 396.85 points to 25,890.18, while the S&P 500 fell 34.4 points to 3,145.32 and the Nasdaq Composite Index tumbled 89.76 points to 10,343.89.

Tuesday’s volume on the New York Stock Exchange totaled 3.84 billion shares with 705 issues advancing, 55 setting new highs, and 2,288 declining, with five stocks setting new lows .

Active movers were led by Nio Inc. (NIO), Genius Brands International Inc. (GNUS) and Corvus Pharmaceuticals Inc. (CRVS)

The number of available jobs in the U.S. rose to 5.4 million in May from 5 million in April, according to the Labor Department’s Job Openings and Labor Turnover Survey.

The U.S. government awarded drugmaker Novavax (NVAX) a contract of $1.6 billion to develop a coronavirus vaccine.

Meanwhile, cases of covid-19 continued to spike in certain parts of the U.S., including Texas, which saw more than 8,000 hospitalizations on Sunday alone. California Gov. Gavin Newsom asked six more counties in his state to close their indoor businesses.

More than 2.93 million covid-19 cases have been confirmed in the U.S., with at least 130,306 deaths.

“This market is way overbought,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “This market has been ignoring the potential problems that are going to arise from the coronavirus.”

“While we expect continued [stock market] volatility, we think there are grounds for optimism that economies and markets can weather the recent acceleration in infections,” said Mark Haefele, chief investment officer at UBS. “There are signs that healthcare systems are coping better with COVID-19, reducing the need for restrictions on freedom of movement. Economic data continues to point to resilience.”

“With the increasing virus cases, people are playing the stay-at-home stocks,” said Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management. “One thing I will say is the probability of returning to a nationwide lockdown is incredibly slim. So I wouldn’t be surprised to see more of a rolling, back-and-forth market rather than one that goes straight up like we’ve seen the past few months.”

Overnight in Asia markets finished mixed, as China’s Shanghai Composite index edged up 0.37%; Japan’s Nikkei-225 slipped 0.44%; and Hong Kong’s Hang Seng exchange fell 1.38%.

In Europe markets finished lower, as Britain’s FTSE-100 retreated 1.53%, while France’s CAC-40 dropped 0.74% and Germany’s DAX fell 0.92%.

Crude oil futures fell 0.74% at $40.33 per barrel, Brent crude dropped 0.65% at $42.80. Gold futures rose 0.86%.

The euro slipped 0.35% at $1.1269 while the pound sterling gained 0.36% at $1.2537.

The yield on the 10-year Treasury dropped 4.97% to 0.65% while yield on the 30-year Treasury sank 3.67% to 1.39%.