By Caitlin Ostroff

U.S. stocks wavered as the global Covid-19 infection rate and potential for new variants fueled concerns about the pace of economic recovery.

The S&P 500 was recently little changed following two straight days of declines. The tech-heavy Nasdaq Composite shed 0.4%. The Dow Jones Industrial Average added about 70 points, or 0.2%.

A new wave of Covid-19 infections is sweeping through a number of countries including India and Japan, raising the prospect of fresh hurdles to the anticipated global economic rebound. Health authorities are also warning that new variants may emerge that are resistant to the existing batch of coronavirus vaccines. Given those concerns, investors are putting the brakes to what has been a furious rally in stocks in recent weeks, leaving the major indexes hovering near record highs.

"There are still risks in this market, particularly as it relates to the vaccine rollout and virus mutations," said Shoqat Bunglawala, head of international multiasset investments at Goldman Sachs Asset Management. "We're still likely to be in an environment with some volatility."

Investors are also closely monitoring earnings to see if the current valuations of expensive stocks can be justified. Chipotle Mexican Grill is among companies that will post results after the New York closing bell.

"We expect earnings to surprise on the upside, but the risks are asymmetric. In an environment where markets are at record highs, any company that doesn't deliver is really punished," said Luca Paolini, chief strategist at Pictet Asset Management. "Over the next few months the direction of earnings will determine the direction of the market."

Netflix shares were the biggest loser in the S&P 500 on Wednesday after the company said subscriber growth for the first quarter was weaker than expected. The company's shares fell 7.4%.

The retreat in U.S. stocks this week is simply a "normal pause" in a bull market, with investors taking the opportunity to book profits and reassess their risk appetite, Mr. Paolini said. "As long as the U.S. economy is strong, it's not really worth the risk of betting against the equity market."

In bond markets, the 10-year U.S. Treasury yield edged up to 1.563%, from 1.562% on Tuesday. Yields rise as prices fall.

Overseas, the pan-continental Stoxx Europe 600 ticked 0.4% higher after its biggest one-day drop since late December.

In Asia, most major stock indexes closed lower. Japan's Nikkei 225 fell 2%, while Hong Kong's Hang Seng declined 1.8%. The Shanghai Composite Index ended the day relatively flat.

Gunjan Banerji contributed to this article.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

(END) Dow Jones Newswires

April 21, 2021 10:11 ET (14:11 GMT)

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