Stocks dip after gains from vaccine-fueled rally on Wall Street

Efforts at a US stock rally largely stumbled on Tuesday as investors reined in their optimism about a promising coronavirus vaccine.

The Dow Jones industrial average dipped as much as 221.18 points, or about 0.9 percent, to 24,376.19 to give back some of its 900-point Monday rally. But the blue-chip index had pared the loss to 41.77 points, or 0.1 percent, as of 11:24 a.m.

The S&P 500 dropped as much as 0.5 percent after posting its best day in six weeks on Monday and then rose about 0.1 percent. The tech-heavy Nasdaq also climbed as much as 0.7 percent into the green by midday.

“The market’s … had that pattern here for the last month of these really sharp up and down moves, so you’re encouraging a lot of people at the margin to try to play that a little bit,” said Jim Paulsen, chief investment strategist at the Leuthold Group.

The muted movements marked a pullback from Wall Street’s enthusiasm about progress toward a COVID-19 vaccine from biotech firm Moderna.

While a vaccine is key to reopening the global economy after a pandemic-induced shutdown, experts said investors’ excitement was exaggerated given the small scale of Moderna’s early trial, which had only 45 participants.

“Given the exceedingly long runway for a vaccine to be made available en masse and the short-term nature of news trading, it makes sense for some traders to fade the move based on previous disappointments,” said Stephen Innes, chief global market strategist at AxiCorp.

The choppy session came as Federal Reserve chairman Jerome Powell and Treasury Secretary Steven Mnuchin testified before the US Senate Banking Committee on their response to the coronavirus crisis.

Powell has thrown cold water on hopes for a quick rebound from the economic downturn the pandemic has caused, saying the recovery could stretch through the end of next year.

Wall Street is also getting pessimistic about the pace of the recovery even though the S&P has climbed more than 30 percent from its March low. Only 10 percent of professional investors expect a rapid “V-shaped” rebound amid concerns about a second wave of coronavirus infections, according to Bank of America’s fund manager survey for May.

“What the market wants to see is a viable recovery, meaning slow but steady,” said Quincy Krosby, chief market strategist for Prudential Financial. “This is the key — a recovery that is not thwarted by a second wave.”

With Post wires

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