S&P 500 sees 1st decline after 7 straight record highs; oil falls
Banks and energy companies helped pull stocks mostly lower on Wall Street on Tuesday, ending the Standard & Poor’s 500 index‘s seven-day run of record high closes.
The benchmark index fell 0.2% after having been down 0.9%. The Dow Jones industrial average fell 0.6%. Tech stocks rose, helping the Nasdaq composite to a modest gain that nudged the index to an all-time high.
Oil prices retreated after jumping overnight when talks among members of the OPEC cartel and allied oil producing countries broke off amid a standoff with the United Arab Emirates over production levels. The news dragged energy stocks lower.
Bond prices rose, sending the yield on the 10-year Treasury to its lowest level since February. The decline in bond yields weighed on banks, which led the slide in the S&P 500.
The S&P 500 dropped 8.80 points to 4,343.54. The index notched seven consecutive record highs from June 24 through Friday, gaining 2.6% during that period. It’s now up 15.6% for the year.
The Dow fell 208.98 points, or 0.6%, to 34,577.37, while the Nasdaq rose 24.32 points, or 0.2%, to 14,663.64. The tech-heavy index also set a record high Friday.
The Russell 2000 index of smaller stocks had some of the biggest losses, sliding 31.26 points, or 1.4%, to 2,274.50.
The market sell-off got going early after a report showing growth in the services sector, where most Americans work, slowed in June following record expansion in May.
Longer-term Treasury yields sank as the report suggested this year’s surge in inflation may have already peaked and as nervousness rose in the market.
The 10-year Treasury yield dropped to 1.36% from 1.44% on Friday and is back to where it was in February. It had rallied powerfully earlier this year on worries that inflation was set to burst to dangerous levels as the economy roared back to life.
The report indicated prices that U.S. services businesses are paying rose at a slower rate last month. Exam gloves and masks got cheaper, for example, and the price index for the U.S. services industry decelerated to 79.5 in June after hitting a peak of 80.6 in May, according to the Institute for Supply Management. Any reading above 50 indicates growth.
More broadly, the services industry’s growth slowed last month, and by more than economists expected. That fits into Wall Street’s increasing belief that growth for many areas of the economy is peaking or has done so already.
The report would also give credence to the Federal Reserve’s insistence that inflation looks to be only a temporary problem.
The lower yields pressured banks, which rely on higher yields to charge more lucrative interest on loans. Bank of America fell 2.6% and Citigroup fell 3.1%.
Oil prices pulled back amid a dispute among oil producers over production levels. The U.S. benchmark crude oil price fell 2.4% to $73.37; it earlier rose to $76.98, the highest level since November 2014.
Falling oil prices dragged down energy companies. Exxon Mobil fell 2.8% and Chevron slid 2%.
Shares of ride-hailing company DiDi Global dropped 19.6%. That follows a 5% drop Friday after China announced it would investigate the cybersecurity practices of three ride technology companies, including Didi. The government has also announced cybersecurity reviews of Full Truck Alliance, the operator of two truck logistics platforms and Kanzhun Ltd., the operator of an online recruitment outfit. Full Truck dropped 6.7% and Kanzhun fell 15.9%.
Amazon jumped 4.7% after the Pentagon said it is canceling a cloud-computing contract with Microsoft that could eventually have been worth $10 billion and will instead pursue a deal with both Microsoft and Amazon. Microsoft shares were little changed.
Associated Press writer Stan Choe contributed to this report.