The S&P 500 and Nasdaq ended lower on Monday, pulled down by Amazon, Microsoft and other recent big-name leaders of Wall Street’s recent rally. The TSX also finished the day in the red, with high-flying domestic tech star Shopify also feeling some pain.
The S&P 500 dipped after briefly touching its highest level since Feb. 25. The index has rebounded over 40% since mid-March, even as COVID-19 infections rose rapidly in Arizona, California and Texas and about 35 other states.
Selling accelerated after California Governor Gavin Newsom ordered a massive retrenchment of the state’s reopening, shutting bars and banning indoor restaurant dining statewide and closing churches, gyms and hair salons in hardest-hit counties.
Stocks that outperformed in recent months, including Amazon , Microsoft, Nvidia and Facebook, ended down more than 2% after gaining earlier in the day.
“The rally’s been driven by a handful of names. You’ve had headlines about COVID and layoffs and the economy. It’s finally caught up with these names everybody’s been hiding in,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
Tesla dropped 3.1% after surging 16% earlier in the session. The electric car maker’s stock has been on a blistering rally over the past two weeks as investors bet the electric car maker could report a quarterly profit and potentially join the S&P 500.
Shares of German biotech firm BioNTech jumped over 10% and Pfizer Inc climbed 4% as two of their experimental coronavirus vaccines received the U.S. FDA’s “fast track” designation.
Merger news also perked up investors as chipmaker Analog Devices Inc announced a $21 billion deal to buy rival Maxim Integrated Products Inc, sending its stock 8% higher. Analog shares fell 5.8%.
PepsiCo Inc gained 0.3% after it said it benefited from a surge in at-home consumption of salty snacks such as Fritos and Cheetos during lockdowns.
The Cboe Volatility Index, Wall Street’s fear gauge, closed at its highest level since June 26. Its 4.9-point gain for the session was its largest since June 11.
Investors are bracing for what could be the sharpest drop in quarterly earnings for S&P 500 firms since the financial crisis, according to IBES Refinitiv data. Results from big banks will be in focus this week.
The Dow Jones Industrial Average rose 0.04% to end at 26,085.8 points, while the S&P 500 lost 0.94% to 3,155.22.
The Nasdaq Composite dropped 2.13%, to 10,390.84.
The S&P 500 technology index fell 2.12%, leading declines.
The S&P/TSX Composite Index lost 74.41 points, or 0.47%, at 15,639.41.
Shopify fell 6.22%. Some other recent strong performers also suffered a setback: Ballard Power Systems fell 10.91%, and Docebo - an education software firm benefiting from the stay-at-home trend - lost 10.33%.
Among the biggest advancers were Aphria Inc., rising 8.92% after receiving an analyst upgrade Monday, and Shaw Communications, gaining 5.97% after releasing earnings late Friday that beat Street expectations and prompted several analysts to increase their price targets. Read more: Monday’s analyst upgrades and downgrades
Reuters, Globe staff
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