The S&P 500 and the Nasdaq closed lower as traders capitalized on the latest huge rally

(Reuters) – The S&P 500 and Nasdaq closed in negative territory on Wednesday as investors cashed in after months-long decades of blockbuster stocks and ahead of next week’s major economic and political events.

The Russell 2000 Small Cap Index (.RUT) rose 1.78% as investors continued to shy away from big and growth stocks after their strong gains.

“Over the past week, we’ve seen a massive outperformance of small companies relative to large companies,” said Paul Baiocchi, chief ETF strategist at SS&C ALPS Advisors. “We see that continuing here today.”

US inflation data is expected to show a slight decline in consumer prices in May from the previous month but with an increase in core prices.

Weighing in on equities, the two-year US Treasury yield and the benchmark 10-year yield rose after the Bank of Canada raised interest rates, adding to investor concerns about the upcoming Federal Reserve rate decision in the US.

Money market participants now see a 69% chance that the US central bank will skip a rate hike at its June meeting but will raise in July, down from roughly 77%, according to CME’s Fedwatch tool.

Recently, US stocks have been boosted by a massive stock rally and a stronger-than-expected earnings season, with the S&P 500 (.SPX) up nearly 20% from its October 2022 lows.

Some analysts expect profit-taking soon in big tech stocks and other major growth stocks.

Meanwhile, the CBOE Volatility Index (.VIX) posted the lowest closing level since February 14, 2020.

Wells Fargo raised its price target for shares of Netflix (NFLX.O) to $500 from $400, the highest on Wall Street, according to Refinitiv. The broadcast company rose 0.12% on the news.

The Energy Index (.SPNY) rose 2.65% after oil prices rose, while the KBW Regional Banking Index (.KRX) closed at the highest level since March 29.

The Dow Jones Industrial Average rose 91.74 points, or 0.27%, to 33,665.02 points, the Standard & Poor’s 500 lost 16.33 points, or 0.38%, to 4,267.52 points, and the Nasdaq Composite Index fell 171.52 points, or 1.29%, to 13,104.90.

Yext Inc stock rose 38.44% after the New York-based internet marketing company raised its annual earnings forecast.

Campbell Soup (CPB.N) fell 8.91% after the packaged food maker posted a lower gross margin for its fiscal third quarter, dragged down by higher commodity and freight costs.

Shares of Coinbase (COIN.O) advanced 3.20% the next day to a seven-month low, as the company’s CEO reassured customers their money was safe and blasted the US Securities and Exchange Commission over its lawsuit. On Tuesday, the Securities and Exchange Commission (SEC) sued the largest cryptocurrency exchange in the United States, accusing it of operating illegally, without first being registered with the regulator.

Cathy Wood’s Ark Invest bought 419,324 shares of Coinbase on Tuesday.

Advance issues outnumbered declining issues on the NYSE by a ratio of 1.58 to 1; On the Nasdaq, a ratio of 1.27 to 1 favored the highs.

The S&P 500 posted 22 new highs in 52 weeks and no new lows. The Nasdaq index posted 122 new highs and 40 new lows.

Additional reporting by Shubham Batra and Shristi A. Ashar in Bengaluru Editing by Vinay Dwivedi, Richard Chang and David Gregorio

Our standards: Thomson Reuters Trust Principles.