The S&P 500 reclaimed record highs last seen before the onset of the coronavirus crisis in February on Tuesday, before retreating on doubts about the outlook for a U.S. economy that is still struggling to recover.
The S&P 500 was up at 3,394.99 points at 09:48 a.m. ET, topping the high of 3,393.52 hit on Feb. 19, with Amazon , Netflix and a handful of other tech heavyweights contributing the bulk of the gains.
The Nasdaq index , where most are listed and the first to bounce back fully from a trough in March, hit a record high for the second consecutive session.
All three major indexes quickly retreated, however, and were back in negative territory half an hour later, as optimism about the first round of results from major retailers dissipated.
“Often when we break a milestone we pause,” said Jim Paulsen, chief investment strategist at the leuthold group in Minneapolis.
“It could be a launching pad if it breaks through solidly to create a good few days on the upside but it could also mark a point where you want to sell for the next week.”
The highs underscore the growing disconnect between the stock market and the economy, which is yet to climb back to pre-pandemic levels.
Homebuilding has shown some strength, with U.S. housing starts picked up for a third straight month in July, but a reaction to strong results for Home Depot quickly evaporated as investors worried about the outlook going forward.
Earnings from Walmart Inc also underlined that some areas of consumption had remained resilient through the pandemic, but its shares, too, quickly faltered.
Home Depot’s smaller rival Lowe’s Cos Inc and supermarket operator Target Corp edged lower ahead of their quarterly earnings on Wednesday. Kohl’s Corp fell 15.4% despite beating estimates for net sales.
Readings from retailers this week are expected to close out a better-than-feared earnings season, another trigger for the recent rally.
“The economy, generally speaking, is doing better than what people had expected. There was an over-correction on the downside and once people realized it was overdone, then it returned,” said Brian Bethune, Economist, Tufts University, Medford Mass.
Minutes from the Federal Reserve’s recent meeting, due on Wednesday, may provide some insight into how the central bank sees the recovery playing out. The Fed has cut rates to near zero to bolster business through the pandemic.
At 10:37 a.m. ET, the Dow Jones Industrial Average was down 124.10 points, or 0.45%, at 27,720.81, the S&P 500 was down 4.79 points, or 0.14%, at 3,377.20. The Nasdaq Composite was up 3.05 points, or 0.03%, at 11,132.78.
Declining issues outnumbered advancers for a 1.88-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 2.40-to-1 ratio on the Nasdaq.
The S&P index recorded 20 new 52-week highs and no new lows, while the Nasdaq recorded 51 new highs and 11 new lows.
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