By Amber Burton and Joe Wallace
U.S. stocks finished mixed on Tuesday, with investors taking a breather after a brief record run.
The S&P 500 edged down 4.36 points, or 0.1%, to 3911.23, after the benchmark gauge posted its eighth all-time closing high of 2021 on Monday. The Dow Jones Industrial Average fell 9.93 points, or less than 0.1%, to 31375.83.
The technology-focused Nasdaq Composite Index rose 20.06 points, or 0.1%, to 14007.70, a record.
For the S&P 500 and the Dow, Tuesday marked their first down day in more than a week.
Throughout the day the market remained essentially flat.
"I think the market is enjoying the potential of a package from the Biden administration regardless of how it's actually delivered," said Quincy Krosby, chief market strategist at Prudential Financial.
The recent rally has been fueled by expectations of a new dose of stimulus spending in the U.S., which could add impetus to the economic revival. That has helped pare expectations for turbulence in U.S. stocks, sending the Cboe Volatility Index down this week to less than 22, after the gauge surged to over 37 at the end of January.
"Very small downsized moves are a symptom of low volatility," said Trevor Greetham, head of multiasset at U.K. investment firm Royal London Asset Management. "Low and falling volatility is a bull market phenomenon. You do get quiet days."
Expectations that the economy will revive this year have prompted money managers to bet stocks will continue to power higher, driven by sectors such as energy, banks and consumer companies that are sensitive to growth.
"There is a big reflation trade on," Mr. Greetham added, saying stocks stand to benefit from the distribution of vaccines and the prospect of $1.9 trillion in additional stimulus.
He sees two main risks: New variants of coronavirus that push back the reopening of beaten-down sectors; and a burst of inflation that prompts a big rise in government-bond yields.
House Democrats released the biggest piece of their coronavirus relief bill late Monday, offering a measure that would extend a $400-a-week unemployment insurance payment through Aug. 29 and send $1,400 per-person payments to most households. It will be combined with pieces advancing through other House committees with the aim of getting through the full House later this month.
The second impeachment trial of former President Donald Trump began Tuesday with House Democratic impeachment managers alleging Mr. Trump incited an insurrection at the Capitol. Investors said the trial doesn't weigh heavily on their outlook.
"It doesn't really play into our thinking that much," said Eric Freedman, chief investment officer at U.S. Bank Wealth Management. "I do think one of the big questions that we have heading into the rest of this year that is somewhat related is how much policy room does the Biden administration have."
Mr. Freedman said he is keeping an eye on whether the proceedings will lead to entrenched positions from Democrats and Republicans and what that would mean for future policy.
Despite the market's upward trajectory in recent days, he is keeping in mind potential risks such as an unexpected increase in interest rates and any challenges to producing or distributing the Covid-19 vaccines.
Stocks that have been at the center of a social-media frenzy, including GameStop and AMC Entertainment Holdings, continued to tumble. GameStop fell $9.69, or 16%, to $50.31. AMC fell 68 cents, or 11%, to $5.50.
Money managers are also tracking the flurry of earnings releases from big American companies.
Ride-hailing firm Lyft rose 6% in after-hours trading. The company posted a narrower loss for 2020, buoyed by aggressive cost cuts that included furloughing workers and trimming salaries.
Twitter rose 4% in after-hours trading. The social media platform added users through the holiday quarter and said it continued to add more in January, a month when it booted former President Trump.
Carrier Global dropped $2.45, or 6.2%, to $37.25 after the air conditioning firm announced an earnings miss. Take-Two Interactive Software, publisher of "Grand Theft Auto" and "Mafia: Definitive Edition, " tumbled $13.03, or 6.1%, to $200.31 despite forecast-busting earnings late Monday.
Even after a banner start to 2021 for stocks and signs of froth in corners of the market, many investors remain bullish.
"I think what the market hasn't reflected yet is the potential upside or strength for the economy here in 2021," said Candice Bangsund, a portfolio manager at Fiera Capital. She thinks growth will accelerate as soon as the second quarter, boosting shares of oil producers, miners, banks and industrial companies.
Oil prices paused after their recent advance, which had been powered by shrinking supplies of crude and wagers by investors that vaccines and fiscal stimulus will boost demand. Brent crude futures was up 53 cents, or 0.9%, to $61.09 a barrel.
In the bond market, the yield on 10-year Treasury notes ticked down to 1.156%, from 1.159% Monday.
Stocks also paused in Europe, where the pan-continental Stoxx Europe 500 slipped 0.1%.
In Asia, the Shanghai Composite Index ended the day 2% higher and Japan's Nikkei 225 rose 0.4% by the close.
Write to Amber Burton at Amber.Burton@wsj.com and Joe Wallace at Joe.Wallace@wsj.com
(END) Dow Jones Newswires
February 09, 2021 17:37 ET (22:37 GMT)Copyright (c) 2021 Dow Jones & Company, Inc.