The S&P 500 closed lower on Tuesday, as investors focused on a report questioning Moderna's recent coronavirus vaccine early-stage trial results, wiping out modest gains on the benchmark index in the last hour of trading.

Major averages fell to session lows in the wake of a report from STAT News that questioned the validity of the results of Moderna's vaccine trial, which the company had announced Monday. Moderna Inc shares plunged after the report, and closed down 10.41%.

"The market is keen on health-care news much more than it is on economic data," said Art Hogan, chief market strategist at National Securities in New York. "We are largely baking in the second quarter being down significantly – GDP growth rates, earnings, economic data – but what we don’t know, what will drive markets will be incrementally good news on the healthcare front."

Stocks had initially edged higher as investors attempted to glean information from a mixed bag of results from major retailers.

Home improvement chain Home Depot fell 2.96% after it missed quarterly profit estimates due to higher costs, while department store operator Kohl's Corp tumbled 7.65% after reporting a bigger-than-expected loss.

Walmart Inc, on the other hand, exceeded expectations for quarterly revenue and earnings as online sales soared as consumers stockpiled essentials in response to coronavirus lockdowns. Still, its shares finished 2.12% down after rising as much as 3.4% earlier.

"Everyone wants to take every retailer's report of being indicative of something, but at the same time staying open and doing stuff is good, it costs to do that," said Willie Delwiche, investment strategist at Baird in Milwaukee.

Advance Auto Parts climbed 3.59% after the company said same-store sales improved significantly at the start of the second quarter.

Trillions of dollars in fiscal and monetary stimulus have helped the S&P 500 rebound nearly 35% from its March 23 intraday low. While the benchmark index is now less than 13% below its Feb. 19 closing record, gains have largely slowed in May on uncertainty over truly halting the spread of the coronavirus and allowing business to resume and rising U.S.-China tensions.

The benchmark index surged more than 3% on Monday, boosted by Moderna's promising early-stage data for a COVID-19 vaccine and Federal Reserve Chair Jerome Powell's pledge over the weekend to support the economy as needed until the crisis has passed.

Powell, in testimony to the Senate Banking Committee on Tuesday, said the central bank was continuing to consider ways to accommodate additional borrowers, and Congress should consider anything to keep people out of insolvency.

The Dow Jones Industrial Average fell 390.51 points, or 1.59%, to 24,206.86, the S&P 500 lost 30.97 points, or 1.05%, to 2,922.94 and the Nasdaq Composite dropped 49.72 points, or 0.54%, to 9,185.10.

Declining issues outnumbered advancing ones on the NYSE by a 1.43-to-1 ratio; on Nasdaq, a 1.63-to-1 ratio favored decliners.

The S&P 500 posted 11 new 52-week highs and no new lows; the Nasdaq Composite recorded 60 new highs and seven new lows.

Volume on U.S. exchanges was 10.66 billion shares, compared to the 11.34 billion average for the full session over the last 20 trading days. 

GLOBAL STOCKS

The euro and European government debt rallied, lifted by a Franco-German proposal to fund grants for regions hit hardest by the coronavirus pandemic, while oil traded mostly higher on growing demand as countries eased business lockdowns.

A gauge of global equity markets retreated late in the session after Wall Street skidded on a report from medical news website STAT that said Moderna Inc did not provide enough critical data to assess its potential COVID-19 vaccine.

Moderna shares closed down 10.4% after surging 20% on Monday when it said a small-early stage trial showed promising results, news that rallied equity markets around the world.

Gold prices rose as some investors sought the safe-haven asset on recession fears after a 30.2% decline in U.S. housing starts in April, the biggest percentage drop on record.

Permits for future construction tumbled, adding to data showing the pandemic will drive the deepest U.S. economic contraction in the second quarter since the Great Depression.

The euro rose 0.05% to $1.0918, paring gains on the Franco-German plan for a 500 billion euro European Union recovery fund was announced on Monday.

"The Franco-German proposal represents a material step forward towards harnessing joint fiscal capacity to provide sustained fiscal stimulus to support the economic recovery," said Lee Hardman, currency analyst at MUFG.

Spanish and Portuguese government bond yields fell after a big drop in Italian yields on Monday.

Europe's STOXX 600 index slipped 0.61% after the worldwide surge in equity markets on Monday. But MSCI's gauge of stocks across the globe shed 0.21%.

Powell told U.S. lawmakers that the Coronavirus Aid, Relief and Economic Security (CARES) Act passed in March was "critical" to the Fed's ability to expand credit to offset the economic blow from the coronavirus.

U.S. Treasury yields were lower. The benchmark 10-year yield slid 4.9 basis points to 0.6931%.

Crude oil prices traded higher most of the session but Brent eased toward the end.

U.S. crude rose 68 cents to settle at $32.50 a barrel, while Brent fell 16 cents to settle at $34.65 a barrel.

U.S. gold futures settled 0.6% higher at $1,745.60 an ounce.