Wall Street taps the brakes following its record-setting run

US stocks are taking a pause from their big rally this month that vaulted them back to record heights.

Treasury yields also dipped after a report showed US shoppers spent less at retailers last month than economists expected. The numbers underscore how the coronavirus pandemic is worsening and threatening to drag the economy lower, at least in the near term.

Wall Street has taken a breather on Tuesday.
Wall Street has taken a breather on Tuesday. Credit:AP

Stocks that stormed higher this month on hopes that a vaccine or two may get the global economy back to normal next year receded amid the worries.

The S&P 500 was down 0.2 per cent in early afternoon trading, on pace for its first drop in three days. The Dow Jones Industrial Average was also pulling lower from its record high, and it was down 0.4 per cent. The Nasdaq composite is 0.1 per cent higher.


All three indexes pared their losses as the day progressed. The S&P 500 had been down as much as 1.1 per cent earlier. Despite the soft lead, the Australian sharemarket is poised to open higher, with futures at 4.58am AEDT pointing to a gain of 13 points, or 0.2 per cent, at the open.

Stocks in the pharmacy business were among the biggest drags on the market after Amazon targeted them as the latest industry it’s trying to upend. The retailing behemoth opened an online pharmacy Tuesday that allows customers to have prescriptions delivered to their door in a couple days.

CVS Health fell 8 per cent, Walgreens Boots Alliance dropped 9.3 per cent and Rite-Aid lost 14.6 per cent. Amazon, meanwhile, rose 0.9 per cent.

On the winning side was Tesla, which rose 7.5 per cent following an announcement that it will join the S&P 500 index next month. The index is hugely influential, and nearly $US4.6 trillion ($6.3 trillion) at the end of last year was in funds that mimic the S&P 500.

The electric-vehicle company had already soared 388.8 per cent in 2020 before Monday evening’s index announcement. With a total market value rivalling Johnson & Johnson’s and JPMorgan Chase’s, it’s set to become one of the biggest stocks in the S&P 500.

The broader stock market was slowing on Tuesday, though, and nearly three out of four stocks in the S&P 500 were lower.

Boston Scientific dropped 8.9 per cent for one of the largest losses in the index after it issued a voluntary recall for its LOTUS Edge aortic valve system. Analysts said problems with its delivery system essentially mean an end to what was once a promising business.

Sales at US retailers rose 0.3 per cent last month from September, a sharp slowdown from September’s 1.6 per cent growth. The figure also fell short of economists’ expectations for 0.5 per cent growth.

Part of the shortfall is likely because laid-off workers are no longer getting extra unemployment benefits from the US government following the expiration of several financial-support programs from Congress. Democrats and Republicans in Washington have talked about renewing some of the programs, but progress has been painfully slow amid deep partisanship in Washington.

That’s layering on top of the already accelerating pandemic, which is pushing governments across the United States and Europe to bring back varying degrees of restrictions on daily life in hopes of slowing the spread of the virus. Health experts are warning of a bleak winter on the way.

That’s all helped dilute some of the optimism that’s rushed through markets since early last week. Companies have released encouraging early results for a couple potential COVID-19 vaccines, which is raising hopes that the economy can get back to normal and stocks beaten down during the pandemic can roar back to life. Even with Tuesday’s decline, the S&P 500 is still up about 10 per cent for November so far. That’s better than any monthly performance for the index since April, when stocks were exploding higher following their pandemic-induced plunge.

The yield on the 10-year Treasury fell to 0.86 per cent from 0.89 per cent late Monday.

In Europe, Germany’s DAX was close to flat, and France’s CAC 40 reversed an earlier loss to rise 0.2 per cent. The FTSE 100 in London fell 0.9 per cent.


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