Stocks ended mixed on Tuesday as the S&P 500 and Dow each pulled back from record levels.
The S&P 500 dropped after eking out a record intraday high. The Dow shed more than 1%, or 400 points, at session lows, but pared losses to end lower by just over 200 points. Some Big Tech stocks outperform to help lead the Nasdaq higher, and Amazon (AMZN) gained more than 4.5% while Apple (AAPL) added 1.5% to end at the stock's highest level since January. Each of the major indexes had jumped to fresh record closing highs on Friday, propelled by a June jobs report that reflected a healthy pace of recovery in the labor market but that did not suggest an overheating economy.
Oil prices turned lower after climbing to a multi-year high amid a breakdown in discussions between OPEC+ members earlier this week, with Saudi Arabia and the United Arab Emirates in a stalemate over production cuts. The meeting, which began with a tentative deal to increase output given elevated energy demand during the pandemic-era recovery, ultimately yielded no decision, sending prices of both U.S. and Brent crude higher. A Reuters report that major oil exporter Saudi Arabia raised its August official selling prices (OSPs) for Asia compounded the move higher in the commodities.
"As negotiations continue, we estimate that most outcomes (1) still imply higher prices incoming months as the physical market tightens, (2) with higher OPEC+ production than the group discussed needed by the global oil market next year," Goldman Sachs analyst Damien Courvalin wrote in a note Tuesday. "Price volatility will likely rise."
U.S. West Texas intermediate crude oil futures (CL=F) rose as high as $76.98, or the highest level since mid-2014. Brent crude, the international benchmark (BZ=F) hovered at a two-year high of nearly $78 per barrel.
Equity investors will be looking ahead to the release of the Federal Open Market Committee's June meeting minutes, which will help reveal central bankers' thoughts around adjusting monetary policy as the economic recovery matures. The June meeting had marked a notable shift in the Fed's outlook, with the central bank signaling as many as two rate hikes by 2023. Subsequent public remarks revealed a number of committee members were also warming to the idea of a sooner-rather-than-later move to taper the Fed's crisis-era asset purchase program.
Next week, more catalysts will come as second-quarter earnings season kicks off. As has been the case over the past several quarters, Wall Street has struck an optimistic tone heading into earnings season, especially as vaccinations and business reopenings picked up over the past several months. Consensus on the Street is for second-quarter S&P 500 earnings to grow by an aggregate 63.6% year-on-year, according to FactSet. This would mark the highest earnings growth rate since the fourth quarter of 2009.
4:09 p.m. ET: Stocks pull back from record levels to end mixed: Dow drops 209 points, or 0.6%
Here were the main moves in markets as of 4:09 p.m. ET:
S&P 500 (^GSPC): -8.80 (-0.20%) to 4,343.54
Dow (^DJI): -208.98 (-0.60%) to 34,577.37
Nasdaq (^IXIC): +24.32 (+0.17%) to 14,663.64
Crude (CL=F): -$1.39 (-1.85%) to $73.77 a barrel
Gold (GC=F): +$14.00 (+0.79%) to $1,797.30 per ounce
10-year Treasury (^TNX): -6.1 bps to yield 1.3700%
1:28 p.m. ET: 'We continue to remain bullish on the pace of the traffic recovery in U.S. domestic' as air travelers top 2019 levels: Morgan Stanley
U.S. air traffic jumped above 2019 levels for the first time since the start of the pandemic on July 1 as the holiday weekend and pent-up demand stoked a surge in air travel. The improving trends in air travel bode especially well for domestic leisure travel, noted strategists at Morgan Stanley.
"While we continue to track the severity of the new COVID variant, which is emerging as a potential risk to easing international travel restrictions, the strength in U.S. domestic travel shows no real Delta variant concerns thus far," Morgan Stanley Equity Analyst Ravi Shanker said in an note Tuesday.
"We continue to remain bullish on the pace of the traffic recovery in U.S. domestic and especially prefer LCC/ULCC [low-cost carrier/ultra-low cost carrier] stories that do not have as much corporate/international and balance sheet risk for now, while benefiting from idiosyncratic catalysts," Shanker added.
12:04 p.m. ET: June ISM Services index pulls back more than expected from all-time high
Service sector activity expanded at a slower pace in June compared to May as challenges with supply chain and labor shortages curbed the recovery across the industries seeing the biggest bounce-back after pandemic-related lockdowns.
The Institute for Supply Management's June services index registered at 60.1, pulling back from May's all-time high of 64.0. Readings above the neutral level of 50.0 indicate expansion. Consensus economists were looking for a June print of 63.5, according to Bloomberg.
The employment subindex of ISM's survey fell into contractionary territory for the first time since December 2020, dipping to 49.3 from May's 55.3. The inventories subindex also fell into contraction, with ISM noting that survey respondents said supplier and logistic delays were leading to inventory drawdowns.
"The rate of expansion in the services sector remains strong, despite the slight pullback in the rate of growth from the previous month’s all-time high," Anthony Nieves, chair of the Institute for Supply Management, said in Tuesday's press statement. "Challenges with materials shortages, inflation, logistics and employment resources continue to be an impediment to business conditions."
11:17 a.m. ET: Dow selling intensifies, index drops 1%, or 400+ points
Selling pressure intensified for the three major indexes intraday on Tuesday, with the Dow dropping more than 400 points, or 1%.
The energy, financials and materials sectors lagged in the S&P 500, outweighing mild gains in the information technology and consumer discretionary sectors. Materials and industrial companies Dow, Caterpillar and 3M lagged in the 30-stock Dow Jones Industrial Average, dragging in the index lower.
9:33 a.m. ET: Stocks eke out record highs
Here's where markets were trading just after the opening bell:
S&P 500 (^GSPC): +0.01 (+0.00%) to 4,352.35
Dow (^DJI): -67.46 (-0.19%) to 34,718.90
Nasdaq (^IXIC): +37.78 (+0.26%) to 14,676.09
Crude (CL=F): -$0.34 (-0.45%) to $74.82 a barrel
Gold (GC=F): +$26.60 (+1.49%) to $1,809.90 per ounce
10-year Treasury (^TNX): -3.2 bps to yield 1.4%
8:26 a.m. ET: Didi Global shares plummet after Chinese regulators crack down on ride-sharing app
Shares of Didi Global (DIDI) plunged by more than 19% Tuesday morning after Chinese regulators demanded that Didi's ride-hailing app be removed from mobile app stores in the country.
The move, which came from the Cyberspace Administration of China, came following an investigation around Didi's data-handling practices. The announcement also came just days following Didi's $4.4 billion initial public offering on the New York Stock Exchange, in the largest IPO of a Chinese company in the U.S. since Alibaba's (BABA) debut in 2014.
Shares of other Chinese companies listed in the U.S. including Full Truck Alliance (YMM) and Nio (NIO) also declined, with the specter of an even firmer crackdown from Chinese regulators looming following their decision on Didi. Didi, like other major Chinese tech giants Alibaba, has been the subject of considerable scrutiny from the Chinese government in recent months, and had noted in its prospectus to go public that it met with Chinese market regulators several months ago.
7:16 a.m. ET Tuesday: Stock futures mixed
Here's where markets were trading ahead of the opening bell Tuesday morning:
S&P 500 futures (ES=F): 4,340.00, -2.75 points (-0.06%)
Dow futures (YM=F): 34,644.00, -33 points (-0.1%)
Nasdaq futures (NQ=F): 14,727.00, +13.25 points (+0.09%)
Crude (CL=F): +$1.08 (+1.44%) to $76.24 a barrel
Gold (GC=F): +$25.00 (+1.4%) to $1,808.30 per ounce
10-year Treasury (^TNX): -0.8 bps to yield 1.427%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck