US stocks slid Wednesday as Wall Street took a breather following a historic rally that drove the Dow Jones industrial average past the 30,000 mark for the first time ever.
The blue-chip index dropped as much as 200.82 points, or roughly 0.6 percent, to 29,845.42 a day after cracking the 30,000 threshold and surging to an all-time intraday high of 30,116.51. The benchmark S&P 500, which had also hit a record high on Tuesday, fell about 0.5 percent while the tech-heavy Nasdaq jumped as much as 0.3 percent to approach its all-time intraday record.
The movements indicated investors were locking in some gains ahead of the Thanksgiving holiday rather than abandoning the sunny outlook that fueled Tuesday’s rally.
“This doesn’t mean that the market made a mistake,” said Qunicy Krosby, chief market strategist at Prudential Financial. “It’s looking ahead and seeing 2021. At some point in 2021 we are on the other side of the pandemic.”
Wall Street has grown increasingly optimistic that drugmakers such as Pfizer and Moderna will deliver multiple safe and effective coronavirus vaccines by the end of the year, a crucial step toward helping the global economy recover from its pandemic-fueled downturn.
President Trump also lifted investors’ buoyant moods by formally allowing President-elect Joe Biden to start his transition into the White House, quelling concerns about political instability in Washington.
But the US Department of Labor delivered a dose of reality Wednesday by reporting that 778,000 Americans applied for unemployment benefits last week, well above economists’ expectations for 730,000. Lockdown measures prompted by a nationwide surge in COVID-19 cases have put pressure on the labor market’s fragile recovery in recent weeks.
Wall Street will be keeping a close eye on the process for approving and distributing the vaccines, which could alleviate some of that pressure, according to market observers. Pfizer asked the Food and Drug Administration to clear its shot for emergency use last week, and the feds have said a vaccine could be rolled out in the second week of December.
“Market sentiment remains positive, but investors are waiting for the next big catalyst that could give the stock market another significant boost,” Axi market analyst Milan Cutkovic said. “The COVID-19 vaccine results are great news, but have been priced in by now.”