S&P 500 Inches to Record High, but Vaccine Setback Keeps Lid on Gains

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By Yasin Ebrahim

Investing.com – The S&P 500 inched to a fresh record high Tuesday led by strength in tech, but weakness in cyclicals held back the advance after U.S. health authorities paused the Johnson and Johnson vaccine rollout, souring optimism over the economic reopening.

The rose 0.1%, after hitting a record high of 4,135.20, the fell 0.52%, or 174 points, and the was up 0.68%.

U.S. health authorities halted the use of Johnson & Johnson (NYSE:)’s Covid-19 vaccine after reports that recipients experienced rare blood clotting within 6 to 13 days after receiving the single-shot inoculation.

The Food and Drug Administration said the probe into the blood clots is expected to last for “a matter of days.” The U.S. drug watchdog confirmed that they haven’t seen the blood clots from recipients of the Pfizer (NYSE:) or Moderna (NASDAQ:) vaccines.

Following the news, bullish bets on reopening stocks – those tied to the progress of the economic reopening – like cruise lines, hotels and airlines fell and weighed on the broader market.

Weaker guidance from the American Airlines (NASDAQ:), meanwhile, soured sentiment on the broader sector as the airline forecast wider-than-expected losses for Q1.

The vaccine rollout is pivotal to ensuring the consumer, the backbone of the U.S. economy, feels safe and confident to return to spending.

“The data that I’ve seen points to consumer balance sheets being in the best shape, they’ve been in for many years,” Eric Diton, president and managing director at The Wealth Alliance, said in a recent interview with Investing.com. “I don’t think there is a risk that the consumer is going to disappoint,” Diton added.

Technology helped to prop up the broader market as investors continue to back megacap growth in the run up to quarterly earnings later this month.

Google-parent Alphabet (NASDAQ:), Apple (NASDAQ:), Facebook (NASDAQ:) and Amazon.com (NASDAQ:) and Microsoft (NASDAQ:), the so-called Fab 5, were in the green.

A fall in U.S. bond yields, which trade inversely to prices, also supported investor sentiment on growth stocks despite the latest data showing an uptick in inflation.

The U.S. consumer price index rose by 0.6% in March, topping economists’ expectations for a 0.5% increase, according to data released by the Bureau of Labor Statistics Tuesday.

“One strong month is just a rebound, but we expect further outsized gains as the economy reopens,” Pantheon Macroeconomics said in a note.

Major Wall Street banks were lower ahead of quarterly earnings from JPMorgan (NYSE:), BlackRock (NYSE:) (NYSE:), Goldman Sachs (NYSE:) due Wednesday.

In the midst of the sluggish move in the broader markets some on Wall Street urge caution.

The market is approaching a “power-on stall,” whereby the climb higher becomes more and more labored, “until the plane loses the lift and begins to stop climbing no matter how much power is being applied,” Cannacord said.

In other news, cryptocurrencies were in the spotlight, with bitcoin hitting a record high ahead its multi-billion direct listing of crypto exchange Coinbase.