Stocks slide as rally to record highs takes a pause

Stocks were slightly lower on Wednesday morning after the Dow Jones Industrial Average notched a record close the previous day, as investors flocked to shares that stand to benefit from an economic recovery.

The blue-chip Dow fell 11 points, or 0.07%. The S&P 500 lost 0.2%. The Nasdaq Composite fell 0.5%.

Dow component Salesforce dropped 6.2% and was among the top decliners in the S&P 500, following a downgrade from UBS. UBS also cut Adobe, sending its shares down 4.8%.

Chipmakers and tech stocks remained under pressure after their sell-off on Tuesday. DocuSign, Microsoft and Okta all fell about 2%.

Bank of America gave an upgrade to Pfizer, noting that the company's profits from Covid treatments provide upside for the stock. Pfizer's shares moved 2.4% higher.

ADP reported Wednesday that private job growth totaled 807,000 in December, more than double the Dow Jones estimate of 375,000. The data in the report covers only through the middle of December, however, which was before the height of the escalation in Covid cases and concerns.

Investors looking for clues on where the economy stands heading into the new year also awaited Friday's more closely watched nonfarm payrolls count, which is expected to show a gain of 422,000.

They're also awaiting the release Wednesday of minutes from the December Federal Reserve meeting. Policymakers decided then to accelerate the pace of the monthly bond buying taper and indicated that three quarter-percentage-point interest rate hikes are coming in 2022. They also adjusted their outlook on inflation and economic growth.

However, the market will be seeking additional information on where officials see policy heading, particularly on what will happen with the Fed's nearly $9 trillion balance sheet.

The Dow is up 1.2% for the first week of the year, as of Tuesday's close, and the S&P is slightly higher. The tech-heavy Nasdaq Composite took a turn with the move in bond yields and is down 1.3% for the week. The closely-watched benchmark 10-year Treasury yield jumped as high as 1.71% Tuesday, triggering a sell-off in growth-oriented technology stocks, which initially led market gains to start the week.

Megacap tech stocks underperformed the S&P 500 Tuesday as "investors reconsidered the value of such long-duration assets in the wake of higher rates," Chris Hussey, a managing director at Goldman Sachs, said in a note.

"The Fed is accelerating its removal of liquidity because inflation has broadened, which has the potential to push 10-year yields higher," Ed Al-Hussainy, senior rates strategist at Columbia Threadneedle, said in a note. "But the central bank must be careful not to act too aggressively, which could derail the economic recovery and cause a recession."

Wall Street strategists are expecting a bumpier road ahead for the stock market as the Fed begins to tighten its ultra-easy monetary policy. The median year-end target for the S&P 500 now stands at 5,050, only a 5% gain from Tuesday's close of 4,793.54, according to CNBC's Strategist Survey.