The S&P 500 hovered near record levels again Tuesday, setting a new all-time intraday high as stocks continued their remarkable rebound from their sharp declines earlier in the year.
The broad stock market index rose as high as 3394.99 in morning trading, eclipsing its previous intraday high of 3393.52 set in February before the coronavirus pandemic sent shockwaves through the economy and financial markets. The index was recently down less than 0.1% at 3381.58.
The Dow Jones Industrial Average dropped 0.3%, while the Nasdaq Composite was up 0.3%.
The S&P index has risen for three consecutive weeks and ended Monday just below its record closing high from February, shortly before the pandemic ravaged financial markets.
Trading volumes have fallen sharply in recent sessions, with volume in New York Stock Exchange-listed stocks totaling just 3.52 billion shares Monday, around one-third lower than the average level so far this year, according to Dow Jones Market Data.
“This is a typical August, where things are very, very slow,” said Seema Shah, chief strategist, Principal Global Investors.
Construction workers carrying rafters for a home being built in Rio Rancho, N.M., in July.
Photo: Jim Thompson/Zuma PressHousing starts for July jumped 22.6% in July, beating forecasts, according to figures released by the Commerce Department. Economists had estimated that the measure of new-home construction increased 3.7% in July from the previous month, after a surge for home building in June, when starts jumped 17.3% from the prior month.
Shares of Advance Auto Parts rose 1.2% after reporting better-than-expected results. The company said it benefited from the spending spurred by unemployment benefits and Covid-19 stimulus checks.
Concerns about the prospects for a new spending bill from Congress are weighing on markets, with negotiations reaching what appears to be a stalemate. Senate Majority Leader Mitch McConnell’s comments that discussions may not definitely lead to a deal, combined with media reports that Republicans are weighing further reducing the proposed stimulus amount, are sapping some of the optimism, Deutsche Bank analysts said in a note.
Investors also remain wary that the rift between Washington and Beijing may deepen after the U.S. Commerce Department issued new rules curbing Huawei Technologies’s access to foreign-made chips Monday. The step expanded the Trump administration’s restrictions on the Chinese telecom company’s link to crucial components. The new rules prohibit non-U.S. companies from selling any chips made using U.S. technology to Huawei without a special license.
“The one thing that is weighing on people’s minds is the U.S.-China trade tensions,” Ms. Shah said. “Investors knew that tensions would rise in the run-up to the elections, but not that there would be concrete actions,” she said.
The fresh restrictions have “potentially large implications” for technology companies, Ms. Shah said. That could have broader market implications, as technology stocks have driven the market rally in the U.S. and in Asia.
The recovery in major stock benchmarks in recent months has been mirrored by improved credit conditions, both fueled by central banks’ steps to ease borrowing conditions. Still, investors and analysts remain wary of how sustained the rallies will prove to be against an uncertain economic backdrop and tensions between Washington and Beijing.
“It’s extraordinary when you think second-quarter 2020 was the deepest quarterly contraction we’ve seen” in the U.S. and European economies, said Tomas Hirst, European credit strategist at CreditSights. The rate of economic recovery is likely to slow later in the year, he said. “As we get into September, it may make sense to reduce risk so you’re not rushing for the doors if sentiment changes in the fourth quarter.”
In bonds, the yield on the benchmark 10-year U.S. Treasury ticked down to 0.680%, from 0.683% Monday.
In commodities, gold rose more than 1.2% to $2,022.30 a troy ounce. Silver rose 3.1% to $28.53 a troy ounce. The move higher in precious metals comes as money managers look at commodities as an alternative to pricey stocks and bonds and as a hedge against inflation.
The ICE U.S. Dollar Index, which measures the dollar against a basket of currencies, weakened 0.6% Tuesday to its lowest level in more than two years, according to FactSet.
The global death toll from the coronavirus pandemic approached 775,000. In a hopeful start to the week, the U.S. saw the lowest daily number of new cases in nearly eight weeks.
In Asia, most major equity benchmarks ended Tuesday on a muted note. The Shanghai Composite Index rose 0.4% to hit its highest since February 2018. That built on Monday’s advance, which was fueled by China’s central bank injecting fresh funds into the financial system.
Daniel So, a strategist at China Merchants Bank International, said the central bank’s action showed China wouldn’t tighten monetary policy. But he said it was also unlikely to ease much further.
“Instead of rolling out massive monetary easing, I would expect China to launch more targeted fiscal measures to stimulate domestic consumption and boost infrastructure spending,” Mr. So said.
Chinese stocks hit multiyear highs last month, on optimism about economic recovery and signs of official support for a rallying market, before handing back some gains. However, Mr. So said China’s growth prospects remain uncertain, amid a global downturn and tensions with the U.S.
South Korea’s Kospi Composite fell 2.5% on growing concerns about a rise in local coronavirus infections.
—Joanne Chiu and Sam Goldfarb contributed to this article.
Write to Anna Isaac at anna.isaac@wsj.com
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