Dow Jumps 100 Points as Fed’s Powell Pledges Economic Life Support
After plunging more than 500 points on Monday, the Dow Jones Industrial Average limped into Tuesday's session.
The U.S. stock market is in partial recovery mode on Tuesday, as investors reacted to Fed Chair Jerome Powell's latest testimony. | Image: Spencer Platt/Getty Images/AFP
- The Dow Jones Industrial Average rose by as much as 105 points Tuesday.
- Stocks are recovering from a sharp decline on Monday following the death of Ruth Bader Ginsburg late last week.
- Fed Chairman Jerome Powell made his first of three appearances on Capitol Hill Tuesday, where he pledged continued support of the economy.
The Dow and broader U.S. stock market rose on Tuesday, as investors dissected the Federal Reserve’s latest pledge to keep the economy afloat amid coronavirus.
Dow, S&P 500, Nasdaq Rise
Wall Street’s major indexes opened higher on Tuesday, with the Dow Jones Industrial Average rising by as much as 105 points.
The broad S&P 500 Index of large-cap stocks gained 0.5%, while the Nasdaq Composite added 0.4%.
Most sectors reported gains at the start of Tuesday’s session, with energy and discretionary shares leading the way.
U.S. stocks plunged to start the week after the death of Ruth Bader Ginsburg complicated the Supreme Court nomination process. President Trump has vowed to announce his nominee later this week. Democrats are firmly opposed to replacing Ginsburg before the November election.
Fed’s Powell Pledges to Do Whatever It Takes to Support Economy
Federal Reserve Chairman Jerome Powell reiterated Tuesday the central bank’s pledge to ‘do whatever it takes’ to support the economy.
In prepared testimony before the House Financial Services Committee, Powell said:
We remain committed to using our tools to do what we can, for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy.
Following a series of emergency rate hikes and liquidity programs earlier this year, the Fed vowed last month to let inflation overshoot its 2% target in support of broader macroeconomic objectives.
Last week, officials voted to keep the benchmark interest rate pegged to zero, where it is expected to remain through at least 2023. Watch the video below:
Powell is scheduled to make two other appearances on Capitol Hill this week. On Wednesday, he will speak before the House Select Subcommittee on the Coronavirus Crisis before moving to the Senate Banking Committee on Thursday.
The United States has shown notable improvement since the lockdowns began in the spring, but the same ‘v-shaped’ recovery we saw in the stock market hasn’t translated to the real economy. Powell indicated on Tuesday that “employment and economic activity… remain well below their pre-pandemic levels.” He added that the “path ahead continues to be highly uncertain.”