S&P 500 poised for best quarter since 1998; Boeing weighs on Dow

The S&P 500 on Tuesday was poised to close out its best quarter in more than two decades as improving economic data bolstered investor beliefs that a stimulus-backed rebound for the U.S. economy was on the horizon.

But gains were kept in check by comments from Anthony Fauci, the U.S. government’s top infectious diseases expert, who said there was no guarantee the United States will have an effective COVID-19 vaccine and warned the virus spread “could get very bad,” a reminder that a full economic recovery could be a long road.

The Dow slipped, pressured by a drop of more than 6% in Boeing Co (BA.N), as the airplane maker gave back some of Monday’s 14% surge after Norwegian Air (NWC.OL) canceled orders for 97 aircraft and said it would claim compensation.

“There is a huge game of musical chairs going on here and that is really favoring the Nasdaq and it is really punishing the indices that have the megacap and very familiar names like Boeing,” said Peter Kenny, founder, Kenny’s Commentary LLC and Strategic Board Solutions LLC in Denver.

“That will turn to some extent once we get this under control and kind of get this relatively all-clear signal from the authorities - the political figures and the health authorities.”

The Dow Jones Industrial Average .DJI fell 36.27 points, or 0.14%, to 25,559.53, the S&P 500 .SPX gained 20.8 points, or 0.68%, to 3,074.04 and the Nasdaq Composite .IXIC added 108.80 points, or 1.1%, to 9,982.95.

While coronavirus cases continue to surge in many states, the U.S. economy is showing signs of pickup, with data indicating consumer confidence increased much more than expected in June.

Analysts warned that portfolio rebalancing at the end of the quarter could lead to choppy trading in the session.

The benchmark S&P 500 has rebounded more than 37% from its March 23 closing low and is up nearly 19% for the quarter on unprecedented levels of fiscal and monetary stimulus and the easing of restrictions.

But it is still down about 5% on the year, and gains in June stood under 1% due to the flare-up in virus cases that has threatened to delay reopenings and derail a tentative economic recovery. Federal Reserve Chairman Jerome Powell reiterated in comments on Tuesday that the path of the economy is “highly uncertain.”

Simmering U.S.-China tensions also weighed on sentiment, with Washington beginning to eliminate Hong Kong’s special status under U.S. law in response to China’s national security law for the territory. China said it would retaliate.

Nine of the 11 major S&P 500 sectors were trading higher, with technology .SPLRCT stocks leading the pack with a 1% gain.

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