United States benchmark averages fell on Tuesday (Wednesday AEST), halting a six-day rally in the S&P 500 as enthusiasm for big tech faded and political uncertainty mounted in Washington.
The Dow Jones Industrial Average declined by 114.8 points, or 0.3%, to close at 42,677.2. The S&P 500 shed 23.1 points, or 0.4%, to end the day at 5,940.5. The tech-heavy Nasdaq Composite dropped 72.8 points, or 0.4%, to finish at 19,142.7.
Technology shares, which had fuelled the market's recent surge, came under pressure. NVIDIA lost 0.9%, Advanced Micro Devices fell 1.1%, Meta Platforms eased 0.5%, and Apple dipped 0.9%.
In contrast, Tesla gained 0.5% after CEO Elon Musk reaffirmed his commitment to leading the company for the next five years.
The S&P 500’s six-day rise was its longest since an earlier nine-day streak ended this month. While Monday's gains were modest, they capped a sharp recovery in equities over the past five weeks.
Since reaching a low in April, the S&P 500 has jumped more than 20%, buoyed by optimism about President Donald Trump’s tariff plans. The index is now just 3% below its record high.
However, investor sentiment was tempered by political gridlock. President Trump could not persuade key House Republicans to back his proposed tax bill, amid disagreements over the cap on state and local tax deductions.
The impasse threatens to delay the legislation, which Trump hoped to pass before the Memorial Day weekend.
Separately, St. Louis Federal Reserve Bank President Alberto Musalem warned that policy uncertainty surrounding the Trump administration’s trade and economic agenda could weigh down growth.
"Economic policy uncertainty is high, which makes the path of the economy especially difficult to project. New trade, fiscal, regulatory and immigration policies and other factors will affect the outlook in different ways and on different time horizons, and it will be important to consider their net total effects," Musalem said on Monday.
On the bond market, the yield on 10-year U.S. Treasury notes rose 0.8% to 4.485%, while the 2-year yield dipped 0.1% to 3.970%.
