The S&P 500 and Nasdaq have ended lower, 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 February 25.

The index has rebounded over 40 per cent since mid-March, even as COVID-19 infections rose rapidly in Arizona, California, Texas and about 35 other states.

Stocks that outperformed in recent months, including Amazon, Microsoft, Nvidia and Facebook, ended down more than two per cent on Monday after gaining earlier in the day.

Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut, said the rally had 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,” he said.

Tesla dropped 3.1 per cent after surging 16 per cent earlier in the session.

The electric car maker’s stock has been on a blistering rally over the past two weeks as investors bet it could report a quarterly profit and potentially join the S&P 500.

Shares of German biotech firm BioNTech jumped over 10 per cent and Pfizer climbed four per cent as two of their experimental coronavirus vaccines received the US FDA’s “fast track” designation.

Merger news also perked up investors as chipmaker Analog Devices announced a $US21 billion deal to buy rival Maxim Integrated Products, sending its stock eight per cent higher. Analog shares fell 5.8 per cent.

PepsiCo gained 0.3 per cent after it said it benefited from a surge in at-home consumption of salty snacks such as Fritos and Cheetos during lockdowns.

The Cboe Volatility Index, 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.

The Dow Jones Industrial Average rose 0.04 per cent to end Monday at 26,085.8 points, while the S&P 500 lost 0.94 per cent to 3,155.22.

The Nasdaq Composite dropped 2.13 per cent, to 10,390.84.

The S&P 500 technology index fell 2.12 per cent, leading declines.

Recent economic data has strengthened belief that the stimulus-pumped US economy is on the road to recovery, helping investors look past a recent spike in US infections.

Declining issues outnumbered advancing ones on the NYSE by a 1.56-to-1 ratio; on Nasdaq, a 2.11-to-1 ratio favoured 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 US exchanges was 11.6 billion shares, compared with the 11.9 billion average for the full session over the last 20 trading days.