SPY ETF Slumps Into Close After Testing February Highs | ETF Trends

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.

The other broad market indices relinquished their gains as well, with the Nasdaq Composite falling 1.7% and the Dow Jones Industrial Average giving back a rally of over 300 points to finish the day 104.53 points lower, or 0.4%.
Stock index ETFs slumped along with their underlying benchmarks, after trading mixed throughout the day. The SPDR Dow Jones Industrial Average ETF (DIA), SPDR S&P 500 ETF Trust (SPY), and Invesco QQQ Trust (QQQ) all finished the day in the red.

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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