Stocks slip from record highs as the S&P 500 looks to wrap up its 7th winning month in a row

Stocks retreated slightly on Tuesday as the S&P 500 looks to wrap up its seventh straight month of gains at a record high.

The Dow Jones Industrial Average dipped about 53 points, or 0.15%. The S&P 500 and Nasdaq Composite fell 0.1%.

The S&P 500 was split roughly even between rising and falling stocks. Apparel stock Nike was one of the biggest losers in the Dow, falling more than 1%.

Tuesday marks the last trading day of August, and major averages are poised to post solid gains for the period. The S&P 500 is up 3% this month, while the tech-heavy Nasdaq Composite has climbed 4%, on pace to post its third winning month in a row. The blue-chip Dow is up a more modest 1.3%.

For the S&P 500, it will be its longest winning streak since a 10-month run ending in December 2017. This is also the benchmark’s 9th positive month in the last 10. The index notched its 53rd record close of 2021 on Monday.

“We believe that the momentum toward reopening and recovery is intact and that there is further upside to equities,” wrote Mark Haefele, chief investment officer of global wealth management at UBS, in a note. “The S&P 500 rally is underpinned by robust earnings growth…With the economic recovery broadening, we expect cyclical sectors, including energy and financials, to take the lead.”

Haefele sees the S&P 500 rising another 1.6% from here to 4,600 by year-end and then running to 5,000 by the end of 2022.

The S&P 500 managed to climb up a wall of worry to record highs without even a 5% pullback this year. The broad equity benchmark has rallied more than 20% in 2021 and has more than doubled since its pandemic low in March 2020.

Stellar corporate earnings have provided valuation support and the basis for stock prices to march higher. With the second-quarter reporting season winding down, the S&P 500 is on track to post an earnings growth rate of 95.4%, which would be the largest increase since the fourth quarter of 2009.

“We believe we’re still in the early innings of the cycle and that strong economic and earnings growth and relatively low rates through 2022 should support higher equity prices and sustain the bull market,” Wells Fargo strategists said in a note.

Zoom shares fell about 16% in early trading on Tuesday after the video-conferencing software company showed slowing revenue growth in the second quarter. The drop in shares came even as Zoom’s earnings beat estimates and the company raised full-year guidance as the pandemic took a turn for the worse.

Investors are awaiting a key jobs report on Friday ahead of the Labor Day weekend. Economists polled by Dow Jones expect 750,000 jobs were created in August and the unemployment rate fell to 5.2%. On Tuesday, the S&P CoreLogic Case-Shiller national home price index showed that prices were up 18.6% year over year in June.

On the political front, the Pentagon said the U.S. has finished its evacuation efforts from Kabul’s airport, effectively ending America’s longest war.

Overseas, China’s non-manufacturing PMI for August came in at 47.5, signaling a contraction for the first time since early 2020. Meanwhile, euro zone inflation hit a 10-year high.