Tesla gains after company found not at fault for 2016 fatal crash
U.S. stocks on Tuesday were pulling back from record territory, as investors dumped energy shares following a drop in oil prices, after the S&P 500 and the Dow closed the previous session at records.
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The S&P 500 was off by 9 points, or 0.4%, to 2,443, with 10 of the 11 main sectors trading lower. The energy sector was down 1.7%, leading the losers but the main benchmark was only a few points below its record close set on Monday.
Crude oil sank to a 10-month low (http://www.marketwatch.com/story/oil-hovers-at-seven-month-low-as-investors-weigh-up-supply-issues-2017-06-20), falling more than 3%, weighing on the broader market.
The Dow Jones Industrial Average slid 19 points to 21,511.15 after touching an intraday record of 21,535.03. Chevron Corp.(CVX) fell 1.2%, while Verizon Communication Inc.(VZ) was down 1.7%.
The Nasdaq Composite Index was down 24 points, or 0.4%, to 6,215. The tech-heavy index has moved sharply lower over the past two weeks on concerns the high-value tech industry is in a bubble.
Shares of oil companies were among the worst performers. Transocean Ltd.(RIG) was down 4.3%, Marathon Oil Corp(MRO) was down 2.8% and Hess Corp.(HES) was down 2.9%. A popular gauge of energy sector performance, the Energy Select Sector SPDR ETF(XLE), meanwhile, was on pace for its worst one-day drop since March, according to FactSet data.
More broadly, some analysts said they expected sideways moves over the coming weeks due to lack of fundamental news until the next batch of corporate quarterly results.
"The rotation [out of technology stocks] which in part may have been attributed to last week's options expiration, we think, continues as investors' psychology shifts. We suspect that more winding and grinding ahead of second-quarter earnings season in a few weeks will keep the flame of the positive trend from faltering," wrote Peter Cardillo, chief market economist at First Standard Financial, in a note.
There are also fears that higher Federal Reserve interest rates will trigger a market move into so-called defensive plays. Defensive stocks are shares of companies that manufacture products or provide services viewed as essential regardless of the economic cycle such as consumer staples and utilities.
Read:Tech selloff remains a concern after Fed hike, tepid economic growth (http://www.marketwatch.com/story/tech-selloff-remains-a-concern-after-fed-hike-tepid-economic-growth-2017-06-17)
Fed speakers: In a speech in Amsterdam to a conference co-sponsored by the central banks of Sweden and the Netherlands, Boston Fed President Eric Rosengren (http://www.marketwatch.com/story/feds-rosengren-says-low-interest-rates-do-raise-financial-stability-concerns-2017-06-20) said lower rates may be a more permanent feature on the economic landscape because they reflect broad population trends.
Rosengren's remarks come after the Fed last week raised interest rates by a quarter of a percentage point and outlined a plan for shrinking of its massive balance sheet.
Separately, Chicago Fed President Charles Evans said late Monday the central bank could be done raising rates this year (http://www.marketwatch.com/story/feds-evans-says-possible-there-will-be-no-more-rate-hikes-this-year-2017-06-19). He reiterated those comments during talks on Tuesday on CNBC and with The Wall Street Journal. He said he supports the current policy of "very gradual" interest-rate hikes and a slow reduction of the balance sheet. Earlier on Monday, New York Fed President William Dudley struck a hawkish tone (http://www.marketwatch.com/story/feds-dudley-says-hes-not-paying-attention-to-bond-markets-signals-of-concerns-2017-06-19), arguing against slowing the pace of interest-rate increases.
Dallas Fed President Rob Kaplan will participate in a moderated discussion at the Commonwealth Club of California in San Francisco at 3 p.m. Eastern.
On the economic docket for Tuesday, the current-account deficit for the first quarter rose by 2.5% to $116.8 billion in first quarter. See:MarketWatch's economic calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
(http://www.marketwatch.com/economy-politics/calendars/economic)Politics: In a speech to manufacturers in Washington on Tuesday afternoon, Ryan expressed confidence that the Republican can deliver on promises of a major tax overhaul this year, despite a range of challenges facing his party. He told CNBC during an interview after his speech that completing tax reform was crucial to getting gross domestic product anywhere near a 3% growth rate.
Hopes for a groundbreaking tax shake-up were partly behind the so-called Trump trade that lifted stocks sharply after the election in November. However, after the Republicans struggled with pushing through their health-care reform earlier this year, investors started to scale back expectations of imminent changes.
Stock movers:Tesla Inc.(TSLA) rose 1% after the electric-car maker was found "not guilty" (http://www.marketwatch.com/story/tesla-found-not-guilty-in-fatal-may-2016-crash-says-ntsb-2017-06-20) in a May 2016 fatal crash.
Shares of Lennar Corp.(LEN) climbed 1.6% after the home builder reported fiscal second-quarter results that were well above expectations. Rivals D.R. Horton Inc.(DHI) rose 1% and PulteGroup Inc.(PHM) advanced 1.2%.
Shares of Chipotle Mexican Grill Inc. (CMG) dived 7% after the burrito chain said Monday that it is spending more on marketing as it looks to recover from its E.coli crisis (http://www.marketwatch.com/story/chipotles-stock-tumbles-as-sales-warning-prompts-target-cuts-2017-06-20).
Other markets:Asian stocks closed mixed (http://www.marketwatch.com/story/nikkei-leaps-to-22-month-high-other-asian-markets-quiet-2017-06-19), with Japan's Nikkei 225 index rising for a third straight day and European markets were mostly lower (http://www.marketwatch.com/story/european-stocks-get-a-lift-from-consumer-shares-tech-recovery-2017-06-20).
(http://www.marketwatch.com/story/european-stocks-get-a-lift-from-consumer-shares-tech-recovery-2017-06-20)The ICE Dollar Index rose 0.3% as investors digested the latest Fed news and gold edged down 0.1%.
--Sara Sjolin contributed to this article.
(END) Dow Jones Newswires
June 20, 2017 14:21 ET (18:21 GMT)