The Nasdaq closed lower Tuesday, dragged down by weakness in large-cap tech stocks, while the Dow soared 403.61 points higher in a volatile session marked by seasonally low liquidity.
The session was marked by mixed signals. The NYFANG index, which tracks 10 heavily traded tech names, fell more than 1%.
U.S. President Donald Trump said he was not thinking of extending the July 9 deadline for countries to negotiate trade deals with the U.S.
The Senate's passage of Trump's tax package had investors weighing the bill's stimulative effects against its multi-trillion dollar cost.
"We got to very overbought levels on tech and Nasdaq over the past weeks," said Farz Azarm, managing director of Equities trading with Mizuho Americas. "Today you are seeing a massive unwind" of this movement, he said.
Tesla shares were hit by a renewed spat between CEO Elon Musk and Trump, while economic data backed the U.S. central bank's patient stance on rate cuts.
Tesla dropped more than 4% after Trump threatened to cut off the billions of dollars in subsidies that Musk's companies get from the federal government. Musk had revived his criticism of Trump's wide-ranging tax cut and spending bill.
According to preliminary data, the S&P 500 lost 6.94 points, or 0.11%, to end at 6,198.10 points, while the Nasdaq Composite lost 166.84 points, or 0.82%, to 20,202.89. The Dow Jones Industrial Average rose 403.61 points, or 0.92%, to 44,498.38.
The blue-chip Dow got a boost from healthcare stocks such as UnitedHealth and Amgen, and was just about 600 points away from its all-time high touched in December. Data showed U.S. job openings increased unexpectedly in May, suggesting labor market resilience despite trade and economic uncertainties.
U.S. Treasuries fell in response, pushing the 2-year yield to a near one-week high.
Earlier in the day, Federal Reserve Chair Jerome Powell reiterated the U.S. central bank plans to "wait and learn more" about the impact of tariffs on inflation before lowering rates, again setting aside Trump's demands for immediate and deep rate cuts.
The Institute for Supply Management (ISM) said its manufacturing PMI nudged up to 49.0 last month from a six-month low of 48.5 in May, slightly above economists' forecast of 48.8. Market focus now shifts to Thursday's nonfarm payrolls report, which could help recalibrate bets for a rate cut as soon as July.
Money markets are pricing in a 21.2% likelihood for a July rate cut and see about 64 basis points worth of cuts by the end of this year, per LSEG data. Shares of U.S.-based casino operators rose after Macau reported a rise in June gambling revenue. Wynn Resorts, Las Vegas Sands and MGM Resorts International added more than 7% each.