S&P 500, Nasdaq close at record highs on trade, vaccine developments

NEW YORK (Reuters) - The S&P 500 and the Nasdaq hit all-time closing highs on Tuesday, but a drop in Apple stock capped gains from positive developments in U.S.-China trade and fresh progress in the medical battle against the coronavirus pandemic.

The Dow, which has yet to reclaim its February high, ended the session lower.

Apple Inc weighed heaviest on all three indexes, its stock retreating 0.8% days ahead of its 4-to-1 stock split.

That split, which will reduce Apple’s weight in the Dow, prompted a reshuffle in the blue-chip industrial average, with replacing Exxon Mobil Corp, Amgen Inc taking Pfizer Inc’s spot, and Raytheon Technologies Corp ousted by Honeywell International Inc., Amgen and Honeywell shares advanced 3.6%, 3.2% and 5.4%, respectively.

“These changes reflect what has occurred in the overall business environment,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York.

“But if (the Dow) were a portfolio drafted by a portfolio manager, the client would have fired the portfolio manager,” Pavlik added.

Trade officials in Washington and Beijing reaffirmed their commitment to Phase One of a bilateral trade deal, but goodwill between the countries soured as China called a U.S. spy plane’s flight through a no-fly zone a “naked provocation.”

British drugmaker AstraZeneca has begun trials of its antibody-based drug for the treatment and prevention of COVID-19, the latest development in a global race to combat the pandemic.

FILE PHOTO: A person wearing a face mask walks along Wall Street after further cases of coronavirus were confirmed in New York City, New York, U.S., March 6, 2020. REUTERS/Andrew Kelly/File Photo

On the economics front, the Conference Board’s Consumer Confidence index plunged to a 6-year low this month, while a report from the Commerce Department showed sales of new homes in July surged to a more than 13-1/2-year high.

“You have this dichotomy between what’s happening in the stock market and the economy,” Pavlik said. “They’re moving away from each other.”

“Wall Street believes in a year from now the economy is going to improve and it’s positioning itself to what it anticipates six months to a year from now.”

The Dow Jones Industrial Average fell 60.02 points, or 0.21%, to 28,248.44, the S&P 500 gained 12.34 points, or 0.36%, to 3,443.62 and the Nasdaq Composite added 86.75 points, or 0.76%, to 11,466.47.

Of the major sectors in the S&P 500, six ended the session higher, with communications services enjoying the largest percentage gain and energy falling the most.

American Airlines Group Inc dropped 2.2% after announcing it would layoff 19,000 employees in October unless the government extends airline payroll aid.

Electronics chain Best Buy Inc beat analysts’ second-quarter sales expectations but warned of a current quarter slowdown following the work-from-home demand surge. Its shares fell 4.0%.

Medtronic rose 2.5% after the medical device maker’s quarterly profit beat consensus. The company said a revival in elective surgeries was boosting demand. jumped over 7% in extended trading after posting results.

Advancing issues outnumbered declining ones on the NYSE by a 1.05-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favored advancers.

The S&P 500 posted 29 new 52-week highs and no new lows; the Nasdaq Composite recorded 58 new highs and 24 new lows.

Volume on U.S. exchanges was 8.30 billion shares, compared with the 9.48 billion average over the last 20 trading days.

Reporting by Stephen Culp; Editing by Cynthia Osterman