By Sam Goldfarb and Joe Wallace 

The S&P 500 slipped Tuesday, snapping a seven-session winning streak, as investors worried about the prospects for a broad coronavirus relief package.

The index had opened modestly higher and flirted with record levels for most of the session, before pulling back in the final hour of trading. It ended the day down 26.78 points, or 0.8%, at 3333.69. The S&P is off just 1.5% from February's high.

The Dow Jones Industrial Average slipped 104.53 points, or 0.4%, to 27686.91, while the technology-heavy Nasdaq Composite Index slid 185.53 points, or 1.7%, to 10782.82.

Shares of companies that are particularly sensitive to the direction of the U.S. economy -- such as banks, energy firms, cruise operators and airlines -- had helped pull indexes higher for much of the session. Stocks, however, broadly turned lower on reports that lawmakers remained at an impasse over economic aid following President Trump's executive actions on jobless benefits and other relief over the weekend.

"The U.S. fiscal stimulus is absolutely critical to keeping market momentum positive," said Nicholas Brooks, head of economic and investment research at Intermediate Capital Group. "Markets are assuming that ultimately Congress will come through with a package, and that there's a lot of brinkmanship going on."

"If we don't get a deal, I think markets will correct quite quickly," he added.

Earlier in the session, investor sentiment had been buoyed after Mr. Trump said late Monday that he was "very seriously" considering a cut to capital-gains tax and paring taxes for middle-income families.

A recent surge in coronavirus cases also continued to show signs of abating, with the U.S. reporting fewer than 50,000 new cases for the second day in a row Monday.

Analysts attributed a recent uptick in stocks in beaten-down sectors partly to the decline in coronavirus cases, as well as a run of better-than-expected economic data. Those gains, though, have corresponded with a slide in tech stocks, a reversal of what has been a hugely popular trade in recent months fueled by a belief that those companies are relatively shielded from the pandemic's economic damage.

"It's a very healthy sign that the market has broadened out and we're not just being led by a handful of stocks," said Bruce Bittles, chief investment strategist at Baird Co.

There is, he added, a "growing confidence that the economy is healing maybe a little faster than it was a few months ago and the second wave of the virus didn't do as much harm as was previously feared."

Signs of a shift in investors' thinking were also reflected in a tough session for gold and U.S. government bonds -- assets that are traditionally viewed as havens during times of economic or financial stress.

The price of gold fell 4.5% to $1,932.60 a troy ounce, its biggest one-day percentage decline since March. The yield on the benchmark 10-year U.S. Treasury note rose to 0.657% from 0.573% Monday, marking its largest increase since June. Yields rise when bond prices fall.

Investors are still concerned by a pickup in infections in parts of Europe that had appeared to bring the virus under control.

"It's hard for markets to digest the conflicting newsflow" on the virus in different regions, said Hugh Gimber, global market strategist at J.P. Morgan Asset Management. One positive for the world economy is that local lockdown measures "have had a less striking impact on mobility and spending data than the much more stringent lockdowns earlier in the year, " he said.

Among gainers Tuesday, Norwegian Cruise Line climbed 51 cents, or 3.4%, to $15.64, while JPMorgan Chase advanced $3.18, or 3.2%, to $103.82

Earnings season for the largest U.S. companies is in its final innings. Shares of International Flavors & Fragrances fell $5.26, or 4%, to $125.29 after the company reported a 40% drop in quarterly operating profits. With results in from more than 90% of the companies in the S&P 500, about 80% have beaten analysts' profit forecasts, according to FactSet.

Overseas, the Stoxx Europe 600 jumped 1.7%. Hong Kong's Hang Seng Index snapped three days of losses to rise 2.1%. The increase was driven partly by a rally in shares of Macau casino stocks, which jumped after the semiautonomous territory's government eased quarantine requirements for visitors from mainland China.

Elsewhere, Japan's Nikkei 225 gained 1.9%, while the Shanghai Composite Index lost 1.2%.

--Frances Yoon and Xie Yu contributed to this article.

Write to Sam Goldfarb at sam.goldfarb@wsj.com and Joe Wallace at Joe.Wallace@wsj.com

(END) Dow Jones Newswires

August 11, 2020 17:18 ET (21:18 GMT)