By Noel Randewich
(Reuters) - The S&P 500 and Nasdaq ended lower on Monday, pulled down by Amazon, Microsoft and other recent big-name leaders of Wall Street's recent rally.
The S&P 500 dipped after briefly touching its highest level since Feb. 25. The index has rebounded over 40% since mid-March, even as COVID-19 infections rose rapidly in Arizona, California and Texas and about 35 other states.
Stocks that outperformed in recent months, including Amazon
Selling accelerated after California Governor Gavin Newsom ordered a massive retrenchment of the state’s reopening, shutting bars and banning indoor restaurant dining statewide and closing churches, gyms and hair salons in hardest-hit counties.
"The rally's been driven by a handful of names. You've had headlines about COVID and layoffs and the economy. It's finally caught up with these names everybody's been hiding in," said Michael O'Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
Tesla
Shares of German biotech firm BioNTech
Merger news also perked up investors as chipmaker Analog Devices Inc
PepsiCo Inc
The Cboe Volatility Index <.VIX>, Wall Street's fear gauge, closed at its highest level since June 26. Its 4.9-point gain for the session was its largest since June 11.
Investors are bracing for what could be the sharpest drop in quarterly earnings for S&P 500 firms since the financial crisis, according to IBES Refinitiv data. Results from big banks will be in focus this week.
For a graphic on S&P 500 versus financials: widest gap since GFC, click https://fingfx.thomsonreuters.com/gfx/mkt/jbyvrrwjave/SPX%20versus%20financials.png
The Dow Jones Industrial Average <.DJI> rose 0.04% to end at 26,085.8 points, while the S&P 500 <.SPX> lost 0.94% to 3,155.22.
The Nasdaq Composite <.IXIC> dropped 2.13%, to 10,390.84.
The S&P 500 technology index <.SPLRCT> fell 2.12%, leading declines.
Recent economic data has strengthened belief that the stimulus-pumped U.S. economy is on the road to recovery, helping investors look past a recent spike in U.S. infections.
Declining issues outnumbered advancing ones on the NYSE by a 1.56-to-1 ratio; on Nasdaq, a 2.11-to-1 ratio favored decliners.
The S&P 500 posted 38 new 52-week highs and no new lows; the Nasdaq Composite recorded 128 new highs and 22 new lows.
Volume on U.S. exchanges was 11.6 billion shares, compared with the 11.9 billion average for the full session over the last 20 trading days.
(Additional reporting by Medha Singh and Devik Jain in Bengaluru, and by Stephen Culp and Sinead Carew in New York; Editing by Marguerita Choy)