Dow takes U-turn lower as investors tune into Powell, Mnuchin on the coronavirus response, but tech stocks rise

The Dow took a U-turn lower Tuesday afternoon, but tech stocks were higher, as investors tuned into a congressional hearing featuring Federal Reserve Chairman Jerome Powell and Treasury Secretary Steven Mnuchin that could provide more investor guidance about the government’s economic response to the rising numbers of coronavirus cases.

Tuesday marks the final day of the month, quarter and first half of the year, which may lead to some choppiness as investors make last-minute changes to their portfolios, and as investors continue to monitor COVID-19 developments, experts say.

The stock market will be closed on Friday in observance of the Fourth of July holiday.

How are benchmarks performing?

The Dow Jones Industrial Average DJIA, -0.06% was 35 points lower, or 0.1%, at 25,557, those for the S&P 500 index SPX, +0.72% rose 20 points, or 0.7%, at 3,073, while the Nasdaq Composite Index COMP, +1.19% added 112 points, or 1.1%, at 9,987.

On Monday, the Dow gained 580.25 points, or 2.3%, its best one-day percentage climb since June 5, according to Dow Jones Market Data. The S&P 500 index advanced 44.19 points, or 1.5%, to finish at 3,053.24. The technology-laden Nasdaq Composite Indexpicked up 116.93 points, or 1.2%, to end at 9,874.15

What’s driving the market?

After a rally to start a holiday-shortened week, market participants were tuning into joint testimony from Powell and Mnuchin about the U.S.’s economic response to the global public health disaster. The two are speaking in front of the U.S. House of Representatives Financial Services Committee.

LIVE BLOG: Mnuchin, Powell testify before House panel on coronavirus aid

In prepared remarks, Powell said the reopening of businesses has happened sooner than central bank officials expected, as has a rebound in some economic activity, but he cautioned against complacency.

“While this bounce back in economic activity is welcome, it also presents new challenges—notably, the need to keep the virus in check.”

The hearing was the first update of its kind as required by the $2 trillion relief package Congress approved in March, comes as the global tally for confirmed cases of the coronavirus that causes COVID-19 rose to 10.3 million on Tuesday, according to data aggregated by Johns Hopkins University. The number of deaths climbed to 505,518. Within the U.S., infections have climbed in 35 states over the past 14 days, according to a New York Times tracker, with California, Texas and Florida leading the way.

Both New Jersey and New York, states that have been seeing a smaller rise in new cases, have said that they will be forced to delay aspects of their business reopening plans as the virus spreads elsewhere.

Ahead of that testimony, New York Fed President John Williams on Tuesday warned that the worst of the early days of the pandemic may be over, but noted that the economy remains damaged, at a virtual talk sponsored by the Institute of International Finance.

In a separate hearing Tuesday, public-health expert Dr. Anthony Fauci warned that the U.S. could see 100,00 new coronavirus infections a day in the U.S., unless everyone steps up their game. Speaking at the Senate Health, Education, Labor and Pensions Committee in Washington, D.C., Fauci said many states have reopened too quickly, and people are not abiding by rules of social distancing.

In Asia, China’s official manufacturing purchasing managers for June rose to 50.9 from 50.6 in May, while the services PMI rose to 54.4 from 53.6, suggesting the second largest economy in the world is recovering from the coronavirus pandemic. Meanwhile, the National People’s Congress Standing Committee approved landmark national-security law for Hong Kong, which may further raise tensions between Beijing and Washington.

In U.S. economic data, the Case-Shiller house price index rose 4% on an annual basis in April. Meanwhile, the index of consumer confidence rose to 98.1 this month from a revised 85.9 in May, the Conference Board said Tuesday. Economists polled by MarketWatch expected a reading of 90.8 in June. The level of confidence still remains well below precrisis levels.

Separately, Atlanta Fed President Raphael Bostic and Minneapolis Federal Reserve Bank President Neel Kashkari will participate in a discussion on equality in the economy hosted by National Association of Business Economics at 2 p.m.

Which stocks are in focus?
  • Shares of Lululemon Athletica Inc. LULU, +5.56% gained 6% on news it will acquire at-home fitness company Mirror for $500 million.
  • Shares of Conagra Brands Inc. rose more than 6% on Tuesday after the owner of food brands, including Birds Eye and Healthy Choice, topped earnings estimates for its fiscal fourth quarter thanks to strong demand for at-home dining during the pandemic.
  • FedEx Corp. FDX, +3.01% is slated to report results after the close of trade Tuesday
  • Wells Fargo shares WFC, -0.44% fell 0.5% after the bank was one of the few major lenders to announce that it was cutting its dividends after bank stress tests conducted last week.
  • Papa John’s International Inc. PZZA, -0.77% said Tuesday that same-store sales for the five weeks ended June 28 at its North America restaurants rose 24.4% from a year ago, and rose 6.0% internationally, as demand continued to be strong amid the COVID-19 pandemic. Its stock fell 1.4%.
  • Netlfix Inc. NFLX, +1.53% announced Tuesday an effort to grow economic opportunities for Black communities by allocating money to banks and other institutions that help provide financial support. Shares were up 1.3%.
  • Shares of Inovio Pharmaceuticals Inc. INO, -20.66% tumbled 15.8% Tuesday after the company, without disclosing relevant data, said its COVID-19 vaccine candidate was considered safe and well-tolerated in all 40 of the participants in a Phase 1 clinical trial.
  • Tesla Inc. TSLA, +6.90% shares gained more than 6% on Tuesday, pushing the Silicon Valley car maker’s valuation above $200 billion, ahead of second-quarter sales numbers expected this week.
  • Shares of Uber Technologies Inc. UBER, +4.26% were up 4.5% following reports that the ride-hail service is close to a deal to buy privately held Postmates for about $2.6 billion.
How are other assets performing?

West Texas Intermediate U.S. crude CLQ20, +0.20% for August delivery slipped 11 cents, or 0.3%, at $39.60 a barrel on the New York Mercantile Exchange. In precious metals, gold futures GCQ20, +0.93% shot up $19.70, or 1.1%, to trade at $1,800.80 an ounce, heading for its highest finish since 2011.

The 10-year Treasury note yield TMUBMUSD10Y, 0.661% was 2 basis points higher at 0.65%. Bond prices move inversely to yields.

The greenback was down 0.2% against a basket of its major rivals, based on trading in the ICE U.S. Dollar Index DXY, -0.17%.

In European equities, the Stoxx Europe 600 index SXXP, +0.12% closed 0.1% higher and London’s FTSE 100 UKX, -0.90% fell 0.9%.

In Asian markets, the Japanese Nikkei NIK, +1.33% gained 1.3%, Hong Kong’s Hang Seng HSI, +0.51% picked up 0.5%, while South Korea’s Kospi climbed 0.7%. China’s CSI 300 000300, +1.32% rallied 1.3%, while the Shanghai Composite Index SHCOMP, +0.78% advanced 0.8%.