The Dow Jones limped higher on Tuesday, as Jerome Powell's cautious testimony had little impact on the U.S. stock market.
The Dow Jones reversed losses on Tuesday, as the U.S. stock market continues to consolidate. A cautious Jerome Powell did little to boost the mood with predictable testimony in Congress, while election polling continues to flash warnings of a turbulent election period.
All three major U.S. stock market indices managed to climb, with the Nasdaq gaining 0.8%. The S&P 500 rose 0.5%, eclipsing the Dow’s modest gains.
In the absence of any high-profile economic data, the only stats worth paying attention to came from the housing market, where existing home sales continue to rise.
Federal Reserve Chair Jerome Powell stayed on script Tuesday in prepared testimony before Congress.
Cautious optimism mixed with uncertainty is still the viewpoint of the FOMC, as Powell’s testimony outlined:
Economic activity has picked up from its depressed second-quarter level when much of the economy was shut down to stem the spread of the virus. Many economic indicators show marked improvement. Both employment and overall economic activity, however, remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain.
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In a sign of how concerned the Trump administration is about the economy, Treasury Secretary Steve Mnuchin made it clear he believes the Federal Reserve has done all it can. Fiscal stimulus is desperately needed, but with most of the headlines focused on the Supreme Court vacancy, it does not appear the White House will get a bill anytime soon.
Focusing directly on the election, Biden’s capital gains tax is a definite source of concern for investors. Opinion polls continue to indicate that it will be a competitive election, with the Democrat polling strongly in conservative Georgia.
Investor concerns go beyond the actual outcome of the election, as it appears likely that uncertainty could stretch on into December before a result is finalized. A month of uncertainty could create tense trading conditions on Wall Street.
On a more steady day in the Dow 30, financial stocks JPMorgan Chase (-1.4%) and Goldman Sachs (-2%) lagged the index.
Helping support the Dow, Nike was the top performer with a 2% gain. Microsoft rallied again after announcing plans to take on Amazon in the cloud satellite space.
The Dow’s heaviest weighted stock, UnitedHealth, dropped 1.4%.
Last modified: September 23, 2020 2:31 PM