After briefly reaching fresh highs in the futures market, the S&P 500 reversed on Tuesday, snapping a seven-day winning streak, as declines in some of the key technology names spurred a selloff that dropped precipitously into the close.
The broad market index closed 0.8% lower at 3,333.69 for its worst day since last month. At one point earlier in the day, the index advanced 0.6% and traded within half a percent of its Feb. 19 intraday record of 3,393.52.
Markets rallied earlier in the day amid news that Johnson & Johnson executive also told Reuters that the company could generate 1 billion doses of its vaccine candidate if it proves to be successful. This has given analysts some confidence in the continued growth of the market despite Tuesday’s selloff.
“Markets are looking forward to better days ahead,” Jeff Buchbinder, equity strategist at LPL Financial, said in a note. “Although the timing is uncertain, the stock market is expressing confidence that the pandemic will end eventually with a vaccine—or multiple vaccines—and with help from better treatments in the interim.”
There is also some thought that a pullback is healthy and could maintain the durability by having a rotation from throughout sectors as well.
“A concern in the market has been that you’re seeing it becoming tighter and tighter,” said Quincy Krosby, chief market strategist at Prudential Financial. This rotation “helps the overall health of the market. That’s what’s important now and what’s needed.”
For investors looking to get into this market on a pullback, the Vanguard Total Stock Market ETF (VTI) is a broad market ETF that allows access to a wide variety of stocks.
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