U.S. stocks were trading mixed Tuesday afternoon, following the best day for the S&P 500 index and the Dow since early April.
Wall Street was watching congressional testimony from Federal Reserve Chairman Jerome Powell and U.S. Treasury Secretary Steven Mnuchin and parsing earnings reports from major retailers, including Dow components Walmart and Home Depot.
How are benchmarks trading?
The Dow Jones Industrial Average
fell 34 points, or 0.2% at around 24,560, the S&P 500 index
gained 6 points, or 0.2%, to 2,960, while the Nasdaq Composite Index
gained 75 points, or 0.8% at 9,309.
On Monday, the Dow surged 911.95 points, or 3.9%, to finish at 24,597.37, after briefly advancing 1,000 points. The S&P 500 rose 90.21 points, or 3.2%, to end at 2,953.91. The Nasdaq Composite
added 220.27 points, or 2.4%, closing at 9,234.83. The gains were the best rally for the Dow since April
With Monday’s gains, the S&P 500 has recovered 32% from its March 23 low, and is now about 13% below its record high in February.
What’s driving the market?
Markets took a breather following Monday’s aggressive rally, with investors taking profits in stocks in the cyclical sectors, like energy and financials, which led in the previous session and as the tech sector resumed its leadership role.
“You’ve got a battle between the ‘recoverers’ and the people running scared,” Mike Bailey, director of research at FBB Capital Partners told MarketWatch. “We’re a little concerned with the recovery. Where investors are kind of baking in a straight line, we’d like to see a margin or error.”
Investors tuned in to two hours of testimony on Capitol Hill from Powell and Mnuchin, as the economic leaders were grilled by the Senate Banking Committee about why funding from the $2 trillion economic-relief package approved by Congress legislation remains unspent.
The aid aims to provide assistance to small businesses and individuals who have been affected by the lockdown protocols in place to combat the COVID-19 pandemic. Mnuchin said during testimony that the goal is to have all of the Fed facilities up and running by the end of this month.
Fed chair Powell already has suggested that lawmakers, rather than monetary-policy makers, need to do more to support an economy that is likely in the throes of a deep recession as a result of actions taken to curtail the spread of the viral outbreak.
“As a society, we should do everything we can to provide relief to those who are suffering for the public good,” Powell said in prepared remarks.
Some of the sharpest exchanges during Tuesday’s testimony centered around efforts to reopen the economy.
Markets on Monday showed signs of ebullience as investors hung on the more upbeat portions of statements made by Powell during an interview with CBS’s “60 Minutes” on Sunday night in which he said he expects the economy to start to improve in the second half of 2020.
Investors also focused Monday on an upbeat report from pharmaceutical firm Moderna Inc.
which said it was optimistic about a vaccine candidate that had produced antibodies in phase-one clinical trials.
But the momentum on Tuesday afternoon was more muted. “You’ve got relative calm today,” Yousef Abbasi, global market strategist for institutional equities at INTL FCStone told MarketWatch. “I think after a day like yesterday, where you’re up 3%, it does speak to the strength of the market to come back and just be flat today.”
Also on traders’ radar were comments by President Trump late Monday threatening to permanently cut off U.S. funding to the World Health Organization. He has accused the organization of cooperating with China to play down the magnitude of the coronavirus outbreak in its early stages, and the rhetoric was noted by analysts as a sign of heightened tensions between the world’s largest economies.
In economic news, construction of new homes fell 30% in April to the lowest level since 2015, though building permits were issued at a higher rate than forecast.
Boston Fed President Eric Rosengren in a speech Tuesday said he expects the unemployment rate will peak at close to 20%, while providing a sobering assessment of the economy and urging U.S. lawmakers and the central banks to be ready to act boldly.
Which stocks are in focus?
- Walmart Inc.
reported first-quarter earnings and sales that handily beat consensus estimates and a 74% increase in e-commerce sales. But the retail giant also spent nearly $900 million in coronavirus-related expenses during the first quarter, saying it is likely to spend that gain next quarter. Shares were trading down 0.8% Tuesday afternoon, after leading the Dow higher in early trade.
- Shares of Home Depot Inc.
fell 2.3% after the home improvement retailer reported a fiscal first-quarter profit that missed expectations, although revenue and same-store sales rose more than forecast
- Pier 1 Imports Inc.
said Tuesday it is seeking bankruptcy court approval to start an orderly wind-down of its business operations as soon as possible given current COVID-19 store closures. Shares plunged 67%.
- Shares of Kohl’s Corp.
fell 7.4% after the retailer reported first-quarter results.
- Mallinckrodt PLC
shares sank 6.9% in afternoon trading Tuesday, after J.P. Morgan analyst Christopher Schott turned bearish on the specialty pharmaceuticals company, citing an “increasingly challenged” fundamental outlook and continued multiple legal challenges facing the business.
- Amazon.com Inc..
said Tuesday it will create 1,000 new full-time jobs in Delaware, as it launches a new fulfillment center in Wilmington at the site of General Motors Corp.’s
former assembly plant. which closed in 2009. Shares were up 2.2%.
How are other markets trading?
U.S. government bond yields were lower, with the 10-year Treasury note
down 2 basis points at 0.71% on Tuesday, following its biggest daily rise since March 18, according to Dow Jones Market Data. Bond prices move in the opposite direction of yields.
The U.S. dollar weakened against a basket of its major rivals, with the ICE U.S. dollar index
trading down 0.2% Tuesday in New York.
In precious metals, gold futures for June delivery
rose $11.20, or nearly 0.7%, to settle at $1,745.60 an ounce. Crude prices for June delivery
gained 50 cents, or 1.6%, at $32.31 a barrel on the New York Mercantile Exchange, after surging 8.1% Monday to end at a two-month high.
In global equities, the Stoxx Europe 600 index
closed 0.6% lower, while the FTSE 100
pulled back 0.8%. In Asia trade, Japan’s Nikkei
rose 1.5%, Hong Kong’s Hang Seng
jumped 1.9%, the Shanghai Composite Index
closed up 0.8%, while the CSI 300 Index
finished 0.9% higher.
Chris Matthews contributed to this article