The S&P 500 and the Nasdaq slipped on Tuesday, led by heavyweight technology shares, but were still on course to notch another month of gains following the Federal Reserve’s dovish stance on its massive asset purchases.
Seven of the 11 major S&P sectors declined in early trading, with technology (.SPLRCT) and energy shares (.SPNY) among the top losers.
Shares of Apple (AAPL.O) fell 1% after hitting a record high in the previous session, while Microsoft (MSFT.O), Amazon (AMZN.O) and Google-owner Alphabet Inc (GOOGL.O) and chipmaker Nvidia Corp (NVDA.O) dropped, knocking the Nasdaq (.IXIC) off its record peak.
Zoom Video Communications Inc (ZM.O) tumbled 16.7% as it signaled a faster-than-expected easing in demand for its video-conferencing service after a pandemic-driven boom.
Still, the benchmark S&P 500 was headed for its seventh consecutive month of gains, with a near 3% rise in August, after Fed Chair Jerome Powell last week signaled no rush to tighten its monetary policy, helping equities continue their rally.
“There continues to be a positive bias towards U.S. equities and investors are just holding back as we near the anticipated labor market data,” said Arthur Weise, chief investment officer of Kingsland Growth Advisors.
“Expectations are for tech stocks to continue to perform better on the back of strong fundamentals and as there still remains some uncertainty around the effect of the coronavirus on economic growth.”
While a strong recovery in economic growth and corporate earnings have put the S&P 500 on pace for its longest monthly winning run since 2018, investors are concerned about rising coronavirus cases and how quickly the Fed will tighten monetary policy once it begins tapering.
A Reuters poll last week showed strategists believe the S&P 500 is likely to end 2021 not far from its current level.
Investors will also focus on the U.S. monthly jobs data later in the week, which could feed into the Fed’s decision at its September policy meeting.
At 10:17 a.m. ET, the Dow Jones Industrial Average (.DJI) was up 13.74 points, or 0.04%, at 35,413.58, the S&P 500 (.SPX) was down 4.53 points, or 0.10%, at 4,524.26, and the Nasdaq Composite (.IXIC) was down 56.68 points, or 0.37%, at 15,209.21, on pace to end higher for the third straight month.
Among other stocks, Textron Inc rose 1.4% after Cowen upgraded the Cessna business jet maker’s stock to “outperform” from “market perform” and raised its price target to Street-high of $95.
Advancing issues outnumbered decliners by a 1.15-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.13-to-1 ratio on the Nasdaq.
The S&P index recorded 28 new 52-week highs and no new low, while the Nasdaq recorded 62 new highs and 15 new lows.
