S&P 500 ekes out another record, Dow and Nasdaq slip as Apple falls

The S&P 500 rose on Tuesday, hitting another record high after China and the U.S. resumed trade talks. 

The broader market index climbed 0.1% as the financials and health care sectors outperformed. 

In a statement, the Office of the U.S. Trade Representative said that both sided “progress and are committed to taking the steps necessary to ensure the success of the” phase one trade deal. The two countries also “addressed steps that China has taken to effectuate structural changes called for by the Agreement that will ensure greater protection for intellectual property rights,” the statement said.

The statement comes as tensions between both countries has increased, with the U.S. criticizing China’s handling of the coronavirus outbreak within its borders. 

But the Dow Jones Industrial Average and Nasdaq Composite struggled, falling 0.1% and 0.2%, respectively, as Apple shares slid more than 1%.

Tuesday’s action came after the S&P 500 closed above 3,400 for the first time. 

“Equity investors continue to express cautious optimism on the direction of the economy and progress with the virus,” said Mark Hackett, chief of investment research at Nationwide. “Investor sentiment has shifted, with substantial optimism now embedded into the equity markets, driving valuations to the highest level since the technology bubble.”

That optimism comes as the number of newly confirmed coronavirus infections in the U.S. has dropped. Data compiled by Johns Hopkins University showed new cases fell to around 38,000 and have been below 50,000 since mid-August.

Meanwhile, the Food and Drug Administration approved the use of convalescent plasma as a treatment for coronavirus patients. The Trump administration is also reportedly considering fast-tracking an experimental vaccine from the U.K.

Aneta Markowska, chief economist at Jefferies, said high-frequency data on the coronavirus shows economic activity in the U.S. is picking up towards the end of August.

“The reopening of schools is proving to be a positive catalyst, with back-to-school shopping on track to exceed last years’ levels. We also show early/tentative evidence of improving labor market trends in states where schools reopened in early August,” Markowska said in a note.

Dow changes

After the bell, S&P Dow Jones Indices said will replace Exxon Mobil, Amgen will replace Pfizer and Honeywell International will replace Raytheon Technologies in the Dow average. The changes are driven by Apple’s coming stock split, which will reduce the technology weighting in the price-weighted average.

Salesforce, Amgen and Honeywell gained in premarket trading while Exxon Mobil, Pfizer and Raytheon declined. Exxon has been a part of the average for nearly 100 years.

Traders also looked ahead to key data releases, including the latest figures on consumer confidence and new home sales, which were both set for release on Tuesday.

Later this week, the Federal Reserve will hold its annual symposium on monetary policy. Wall Street will look for clues on further stimulus and where the economy is headed out of the event.

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