The Dow underperformed the broader U.S. stock market on Tuesday, as demand for riskier assets waned ahead of key congressional hearings involving Federal Reserve Chairman Jerome Powell.
Beginning Wednesday, the embattled central-bank chief will likely be pressed on monetary policy, Donald Trump, and the Federal Reserve’s independence.
U.S. stocks traded mixed on Tuesday, which reflects a tepid pre-market for Dow futures. The Dow Jones Industrial Average fell 22.65 points, or 0.1%, to 26,783.49.
The broad S&P 500 Index of large-cap stocks reversed losses to settle at 2,979.63. Most sectors reported gains, led by financials and information technology.
Meanwhile, the technology-focused Nasdaq Composite Index climbed 0.5% to settle at 8,141.73.
Jerome Powell will testify before both houses of Congress this week, where he will be pressed on matters ranging from the economy to Donald Trump. At some point in the two-day testimony, Powell will likely have to address President Trump’s scathing criticism of the Fed, which is nothing new but still bears repeating.
Just last week, Trump accused the Fed of undermining the U.S. economy by raising rates “too soon [and] too often” while other central banks did the opposite. The Fed’s sudden U-turn on monetary policy could draw scrutiny from lawmakers at a time when the institution’s independence is being questioned.
“At a certain point, he has to say he is not going to do what the president tells him to do,” CNBC’s Jim Cramer said earlier this week. “He’s got to defend the situation.”
After hiking interest rates four times in 2018, the Federal Reserve all but abandoned its tightening regime in January less than a month after the S&P 500 and Nasdaq entered bear-market territory. By June, the pivot toward a more neutral, and eventually dovish policy position was complete. Now, traders believe with 100% certainty that the Fed will lower interest rates later this month and will do so at least one more time in 2019, according to CME Group’s FedWatch Tool.
Last modified (UTC): July 9, 2019 16:13