U.S. stocks edged lower Tuesday, signaling that major indexes may take a breather after signs of a rapid economic recovery powered them to record highs.
The S&P 500 ticked down 0.2%, a day after the benchmark gauge of large-cap stocks rose to its 17th all-time closing high of 2021. The Dow Jones Industrial Average, which on Monday reached a new peak for the 18th time this year, also slipped 0.2%. The technology-heavy Nasdaq Composite Index was down 0.1%.
Stocks have leapt at the start of the second quarter amid optimism that government spending, vaccinations and the relaxation of restrictions are unleashing a spell of swift economic growth. A series of data have offered evidence that a rebound in activity and hiring is under way a year after the pandemic slammed the brakes on the economy. Investors are betting that sectors such as banking and mining will benefit from the reopening. Technology stocks have also climbed after wobbling at times in the first quarter.
“It looks like the U.S. [economy] has just hit the accelerator,” said Brian O’Reilly, head of market strategy for Mediolanum International Funds. The recent rally shows signs of being broad, and isn’t just concentrated in economically-sensitive sectors that suffered most from the pandemic in 2020, he added. “We’ve certainly seen a moderation in the one-way bet that was being placed until maybe the middle of March.”
The Cboe Volatility Index, which measures expected swings in the S&P 500 based on options prices, edged down to 17.80. That is near its lowest level since before the pandemic began to rattle markets in late February 2020.