Wall Street stocks ended lower Tuesday as top US economic officials warned the US economy faces continued risks, causing the market to give back some of the gains from the prior session.
The Dow Jones Industrial Average finished down 1.6 percent at 24,206.86, pulling back from the 3.9 percent surge Monday.
The broad-based S&P 500 dropped 1.1 percent to 2,922.94, while the tech-rich Nasdaq Composite Index shed 0.5 percent to 9,185.10.
It is not unusual to see a pullback in stocks after a big rally, but a high-profile Capitol Hill hearing highlighted lingering concerns on how to safely revive the economy, analysts said.
US Treasury Secretary Steven Mnuchin warned the US economy risks suffering “permanent damage” the longer the lockdown to contain the COVID-19 pandemic drags on.
The White House has urged states to reopen their economies as quickly as is safely possible and has not embraced the need to approve additional fiscal support right now — a stance taken by congressional Democrats.
Federal Reserve Chair Jerome Powell has in recent days suggested that more will be needed to ease the unprecedented economic pain, but was careful during the hearing not to stray into recommending more spending — the purview of Congress.
FHN Financial’s Chris Low said the partisan divide suggested there will not be a fast agreement to provide more funds to cash-strapped states, “an essential part of laying groundwork for a quick recovery,” he said.
“You’re not going to get that aid if the two parties can’t work together,” Low said.
The market also fell following an article in Stat News, which focuses on health and medicine, expressing skepticism over Monday’s announcement by Moderna about favorable results on a phase 1 test for a coronavirus vaccine.
Moderna’s announcement, which was a major catalyst in Monday’s rally, “revealed very little information” and no data about the vaccine, the report said.
In Tuesday’s session, Southwest Airlines rose 2.2 percent as it reported a “modest improvement” in demand in May after bookings more than offset cancelations for the first time since the COVID-19 crisis.
Retail giant Walmart finished 2.1 percent lower after giving up early gains. The company reported higher profits on a surge in demand for groceries and other essential items, but said it suffered $900 million in COVID-19 related expenses in the first quarter.
Kohl’s slid 7.7 percent as it reported a first-quarter loss of $541 million due to a hit from coronavirus lockdowns that shuttered stores.