S&P 500, Nasdaq, Russell 2000 settle lower after setting records
The Dow Jones Industrial Average closed marginally lower on Tuesday after the blue-chip index relinquished all its early gains in the sharpest daily reversal in nearly two years, according to FactSet.
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In early trade, Dow industrials were up more than 1% and set an intraday all-time high above 26,000. But the rally petered out as investors weighed political developments against quarterly earnings reports and economic data -- both presently underpinning Wall Street's optimism.
What are the benchmarks doing?
The Dow Jones Industrial Average rose as much as 265 points, but closed off 10.33 points, or less than 0.1%, to 25,792. Merck & Co Inc.(MRK) and UnitedHelath Group Inc(UNH) were leading gainers, up 5.8% and 1.9% respectively. General Electric Co.(GE) was down more than 2.9%.
The S&P 500 closed down 9.82 points, or 0.4%, to 2,776, with eight of the 11 main sectors finishing in negative territory. Real estate, health care and consumer staples sectors were the only ones attracting investors, while energy and materials sold off, down more than 1% following a drop in oil prices.
The Nasdaq Composite declined 37.38 points, or 0.5%, to 7,223.69.
The Russell 2000 index of small companies closed down 19.10 points, or 1.2%, to 1,572.
All main indexes hit intraday all-time highs shortly after the opening bell, but closed lower on the day.
Check out:This epic stock-market rally will get a second wind from stellar earnings (http://www.marketwatch.com/story/this-epic-stock-market-rally-will-get-a-second-wind-from-stellar-earnings-2018-01-13)
What is driving markets?
The New York Times reported that President Donald Trump's former chief strategist Steve Bannon was subpoenaed last week by special counsel Robert Mueller (http://www.marketwatch.com/story/bannon-subpoenaed-in-russia-investigation-report-2018-01-16) to testify as part of the probe into possible links between Trump associates and Russia. That news deflated some of investors' early enthusiasm.
The three major equity benchmarks have risen between 23% and 31% over the past 12 months, helped by factors such as an expanding U.S. economy, growth in corporate profits and enthusiasm over the Trump administration's business-friendly policies, including tax cuts.
On the data front, the Empire State manufacturing survey (http://www.marketwatch.com/story/empire-state-factory-gauge-softens-a-bit-in-january-2018-01-16) slipped to 17.7 in January from a revised 19.6 in December, the New York Fed said. Economists had expected activity to inch up to 18.6, according to a survey by Econoday.
Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
What are strategists saying?
"We will see more market exuberance from positive earnings, but there is plenty of political uncertainty that will temper investor expectations," said Alexandra Coupe, associate director and portfolio manager at PAAMCO.
"After a year of good performance and low volatility it is very natural for investors to have 'fear of missing out' and we are likely to continue to see this momentum to persist. We should also remember that when momentum crashes, it does so rather violently," Coupe said.
"Optimism on Wall Street is pretty high as a lot of previously skeptical and bearish investors have turned into stock market fans lately," said Brett Schutte, chief investment strategist at Northwestern Mutual Wealth Management Co.
Which stocks are in focus?
UnitedHealth Group Inc.'s stock (UNH) rose 1.9% after the insurer posted quarterly earnings and revenue that topped expectations.
Citigroup Inc.'s (C) reported a loss in the fourth quarter, as its earnings were wiped out by a $22 billion charge related to the new tax law. Shares were trading 0.4% higher.
Shares of Merck & Co.(MRK) jumped 5.8% after the company announced positive results (http://www.marketwatch.com/story/merck-shares-jump-3-on-news-of-positive-results-from-lung-cancer-trial-2018-01-16)in a late-stage lung cancer trial.
General Electric Co.'s stock (GE) fell 2.9% after the conglomerate said a review of GE Capital's insurance portfolio would result in a $6.2 billion after-tax charge (http://www.marketwatch.com/story/ges-stock-sinks-after-unveiling-62-billion-charge-in-q4-2018-01-16) in the fourth quarter.
Shares of Viacom Inc.(VIA) fell 5.5% after The Wrap on Friday reported that Shari Redstone, president of National Amusements, which owns controlling interests in Viacom and CBS Corp. (CBSA) was reengaging the two media companies in talks to merge.
What are other markets doing?
The ICE U.S. Dollar Index , which measures the buck against a basket of six rivals, was down 0.6% from Monday's level to 90.44.
Bitcoin's spot price (http://www.marketwatch.com/story/bitcoin-tumbles-to-6-week-low-as-top-cryptocurrencies-all-sell-off-2018-01-16) was down sharply to a six-week low, as the top cryptocurrencies all sold off. European equities (http://www.marketwatch.com/story/european-stocks-head-higher-as-euro-pulls-back-2018-01-16) and Asian markets (http://www.marketwatch.com/story/asian-stocks-bounce-back-hang-seng-aims-for-a-record-2018-01-16) scored gains. Gold futures edged higher and oil futures (http://www.marketwatch.com/story/oil-pulls-back-from-3-year-high-with-brent-below-70-2018-01-16) pulled back.
(END) Dow Jones Newswires
January 16, 2018 16:33 ET (21:33 GMT)