Tech leads stocks lower on Wall Street, easing off records

Drops in big technology companies led stocks broadly lower on Wall Street Tuesday, easing major indexes off the latest record highs they set a day earlier.

Markets have been choppy as investors try to get a clearer picture of how well the economy is recovering from the pandemic and how the Federal Reserve will eventually ease up on its support for low interest rates. The central bank is meeting Tuesday and will release its latest statement on Wednesday.

The S&P 500 fell 1.1% as of 2 p.m. Eastern. The benchmark index reached its latest record high on Monday and is now on pace for its first pullback in six days. The Dow Jones Industrial Average fell 238 points, or 0.7%, to 34,906 and the tech-heavy Nasdaq slid 2%.

Technology companies and a mix of consumer-oriented companies were among the biggest losers. Microsoft fell 1.9% and Apple fell 2%. Both companies are set to report their latest results after the close of trading.

Investors shifted money to sectors seen as less risky, including utilities and companies that make household and personal goods.

They also bought bonds, sending the yield on the 10-year Treasury note down to 1.24% from 1.27% late Monday. Long-term yields have eased off from their sharp rise earlier in the year, but Wall Street is still worried about inflation.

Wednesday's report from the Fed could give investors more clues about the central bank's level of concern and when it might start reducing its monthly bond purchases that have helped keep interest rates low.

Investors considered a mixed bag of earnings from several large companies. UPS slumped 7.7% after its revenue for the latest quarter fell short of analysts’ forecasts. Wall Street brushed off seemingly solid results from several other companies. Tesla fell 2.8% and industrial conglomerate 3M fell 1%, despite reporting solid financial results.

The backdrop for stocks "is still favorable, ”said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “The weakness today is just part of the normal ebb and flow.”

The Conference Board reported that consumer confidence edged higher in July, marking the sixth straight month that the measurement has risen. The International Monetary Fund said it expects the global economy to expand 6% this year, a dramatic bounce-back from the 3.2% contraction in the pandemic year of 2020.

Part of the uncertainty hovering over markets has to do with COVID-19 and its potential impact on the recovery. Case numbers and hospitalizations have been ticking higher in certain parts of the U.S. and world as the Delta variant spreads.

“The pace of growth is being questioned because of COVID-19 variants,” Sandven said. “There is some concern that the pace may not be as robust.”

The broad declines in the U.S. follow more drops in China, where a regulatory clampdown on various companies is spooking investors. Hong Kong’s Hang Seng lost 4.2% and the Shanghai Composite lost 2.5%.