U.S. stocks pared losses Wednesday following Tuesday’s record highs as rising coronavirus cases and a slowdown in private sector job creation weighed on investor sentiment.
The S&P 500 was essentially flat in morning trading, a day after the benchmark set its 27th closing record of the year. The Nasdaq Composite slipped 0.2% after also setting a record. And the Dow Jones Industrial Average retreated about 7 points, less than 0.1%.
The market has been propelled higher in recent weeks by optimism that Covid-19 vaccines will help accelerate the economic rebound. That has led to a jump in stocks that are sensitive to economic growth, including energy and banks.
“We’ve obviously had a great run up since just before the election results and yesterday we saw that record high, so that is as much a reason as any for some consolidation,” said Derek Halpenny, head of research for global markets in the European region at MUFG Bank.
Stocks are likely to continue rallying in coming weeks, despite valuations that appear to be stretched, he added. “Why would you be a seller of stocks when you know that policy support, both fiscal and monetary, is there and probably will be there going forward?”