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Pullback for S&P 500 ends 7-day run of record highs

by The Associated Press | July 7, 2021 at 1:54 a.m.
A man wearing a face a mask walks past a bank's electronic board showing the Hong Kong share index in Hong Kong, Tuesday, July 6, 2021. Asian shares were mixed in muted trading on Tuesday as oil prices surged higher after a meeting of oil producing nations was postponed. (AP Photo/Kin Cheung)

Banks and energy companies helped pull stocks mostly lower Tuesday, ending the S&P 500's seven-day run of record-high closes.

The benchmark index fell 0.2% after having been down 0.9% earlier in the day. The Dow Jones Industrial Average fell 0.6%. Tech stocks rose, helping the Nasdaq to a modest gain that nudged the index to a record high.

The S&P 500 dropped 8.80 points, to 4,343.54. The index notched seven consecutive record highs from June 24 through Friday, gaining 2.6% during that period. It's now up 15.6% for the year.

The Dow fell 208.98 points, to 34,577.37, while the Nasdaq composite rose 24.32 points, or 0.17%, to 14,663.64. The tech-heavy index also set a record high Friday.

The Russell 2000 index of smaller stocks had some of the biggest losses, sliding 31.26 points, or 1.4%, to 2,274.50.

Oil prices retreated after jumping the night before when talks among members of the OPEC cartel and allied oil-producing countries broke off amid a standoff with the United Arab Emirates over production levels. The news dragged energy stocks lower.

Bond prices rose, sending the yield on the 10-year Treasury to its lowest level since February. The decline in bond yields weighed on banks, which led the slide in the S&P 500.

"We had a really strong move coming into this week," said Mark Hackett, chief of investment research at Nationwide. "It's almost natural to have a pullback when you have that kind of move."

The market sell-off got going early after a report showing that growth in the services sector, where most Americans work, slowed in June following record expansion in May.

Longer-term Treasury yields sank as the report suggested this year's surge in inflation may have already peaked and as nervousness rose in the market.

The 10-year Treasury yield dropped to 1.36% from 1.44% Friday; it's now back to where it was in February. It had rallied earlier this year on worries that inflation was set to burst to dangerous levels as the economy roared back.

The report indicated the prices that U.S. services businesses are paying rose at a slower rate last month. Exam gloves and masks got cheaper, for example. The price index for the U.S. services industry decelerated to 79.5 in June after hitting a peak of 80.6 in May, according to the Institute for Supply Management. Any reading above 50 indicates growth.

More broadly, the services industry's growth slowed last month, and by more than economists expected. That fits into Wall Street's increasing belief that growth for many areas of the economy is peaking or has done so already.

"What I took from that is that economic growth is slowing," said Sam Stovall, chief investment strategist at CFRA.

The report would also give credence to the Federal Reserve's insistence that inflation looks to be only a temporary problem.

The lower yields pressured banks, which rely on higher yields to charge more lucrative interest on loans. Bank of America fell 2.6%, and Citigroup fell 3.1%.

Falling oil prices dragged down energy companies. Exxon Mobil fell 2.8%, and Chevron fell 2%.

The market is currently in a summer lull, with investors having little to act on until next week, when corporate earnings season starts up again. Investors face a holiday-shortened week because stock markets were closed Monday.

Shares of the ride-hailing company Didi Global dropped 19.6%. That followed a 5% drop Friday after China announced it would investigate the cybersecurity practices of three ride-technology companies, including Didi.

Amazon jumped 4.7% after the Pentagon announced it is canceling a cloud-computing contract with Microsoft that could eventually have been worth $10 billion, saying it will instead pursue a deal with both Microsoft and Amazon. Microsoft shares were little changed.

Information for this article was contributed by Stan Choe of The Associated Press,

People wearing face masks walk past a bank's electronic board showing the Hong Kong share index in Hong Kong, Tuesday, July 6, 2021. Asian shares were mixed in muted trading on Tuesday as oil prices surged higher after a meeting of oil producing nations was postponed. (AP Photo/Kin Cheung)
People wearing face masks walk past a bank's electronic board showing the Hong Kong share index in Hong Kong, Tuesday, July 6, 2021. Asian shares were mixed in muted trading on Tuesday as oil prices surged higher after a meeting of oil producing nations was postponed. (AP Photo/Kin Cheung)
A woman wearing a face a mask walks past a bank's electronic board showing the Hong Kong share index in Hong Kong, Tuesday, July 6, 2021. Asian shares were mixed in muted trading on Tuesday as oil prices surged higher after a meeting of oil producing nations was postponed. (AP Photo/Kin Cheung)
A woman wearing a face a mask walks past a bank's electronic board showing the Hong Kong share index in Hong Kong, Tuesday, July 6, 2021. Asian shares were mixed in muted trading on Tuesday as oil prices surged higher after a meeting of oil producing nations was postponed. (AP Photo/Kin Cheung)
A woman wearing face a mask walks past a bank's electronic board showing the Hong Kong share index in Hong Kong, Tuesday, July 6, 2021. Asian shares were mixed in muted trading on Tuesday as oil prices surged higher after a meeting of oil producing nations was postponed. (AP Photo/Kin Cheung)
A woman wearing face a mask walks past a bank's electronic board showing the Hong Kong share index in Hong Kong, Tuesday, July 6, 2021. Asian shares were mixed in muted trading on Tuesday as oil prices surged higher after a meeting of oil producing nations was postponed. (AP Photo/Kin Cheung)

Print Headline: Pullback for S&P 500 ends 7-day run of record highs

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