U.S. Stocks Slide as Tech Shares Retreat

U.S. stocks ticked down Tuesday, as technology stocks weighed on major indexes.

The S&P 500 slid 1%. The benchmark advanced 0.3% on Monday, despite declines in giant technology stocks. The technology-heavy Nasdaq Composite fell 1.7% Tuesday morning. The Dow Jones Industrial Average declines 0.7%.

The major indexes had been hovering close to record levels as investors weigh strong economic data and robust corporate earnings against inflation concerns and rising coronavirus cases in parts of the world. Some money managers say brightening prospects for the economy and for businesses’ profits has been baked into stocks’ valuations.

“The market has already priced in a strong recovery and earnings season over-delivered, but it was still not enough to drive indexes much higher,” said Sophie Chardon, cross-asset strategist at Lombard Odier. “The market is now focusing on the next steps, especially on policy. The next step will be to see how the Fed shifts its monetary policy outlook.”

The improving economic picture is encouraging some investors to step up bets on companies that stand to benefit the most from the recovery. That is leading to a rally in energy and banking stocks, while technology shares have slowed their gains.

“The rotation trade is back and it will gain momentum over the next few weeks,” said Florent Pochon, head of cross-asset strategies at French bank Natixis. “As long as central banks stay dovish and you combine that with the reopening of the economy, then that should be a perfect dynamic for stocks.”

Following the opening bell, Pfizer rose 0.4%. The pharmaceutical giant reported higher profits partly driven by Covid-19 vaccine sales. CVS Health rose 2% after lifting its earnings guidance and reporting higher profits for the quarter.

Under Armor ticked down 1.6% after agreeing to settle a regulatory claim that it failed to disclose it was pulling forward orders from future quarters.

Earnings reports from T-Mobile US and Lyft are due after markets close.

Data on U.S. factory orders, scheduled for 10 a.m. ET, are likely to show orders rebounded in March from the previous month.

U.S. government bond yields declined for a third consecutive day. The 10-year Treasury yield edged down to 1.583%, from 1.606% on Monday. Bond yields fall when prices rise.

Brent crude, the international oil benchmark, rose 1.8% to $68.79 a barrel on optimism about recovering demand in the U.S. and Europe.

Overseas, the pan-continental Stoxx Europe 600 retreated 0.6%. In Hong Kong, the Hang Seng Index rose 0.7%. Markets in Japan and mainland China were closed for public holidays.

Traders worked on the floor of the New York Stock Exchange on Monday.

Photo: Courtney Crow/Associated Press

—Amber Burton contributed to this article.

Write to Will Horner at William.Horner@wsj.com

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