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Stocks traded lower Tuesday afternoon, holding onto declines after rising COVID-19 cases abroad prompted an extended lockdown in Europe's largest economy. Investors also considered commentary from Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen.
The Dow, S&P 500 and Nasdaq traded slightly lower, after fluctuating between mild gains and losses earlier in the session. Treasury yields pulled back further, and the yield on the benchmark 10-year note hovered around 1.64%.
A still-dire COVID-19 situation prompted Germany to announce a one-month extension to its stringent lockdown measures early Tuesday, calling into question the pace of the global recovery from the pandemic. Meanwhile, shares of AstraZeneca (AZN.L) declined after the U.S. Data and Safety Monitoring Board said the drugmaker may have used outdated information and provided an "incomplete" assessment of the efficacy of its COVID-19 vaccine earlier this week. Though the inoculation has not been approved in the U.S., it has been administered to about 5 million Europeans so far.
Traders were closely eyeing remarks from Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen before the U.S. House Financial Services Committee, in the duo's latest public appraisal of the role fiscal and monetary policy have played in the economic recovery coming out of the COVID-19 pandemic. The hearing began at about noon eastern time, and ended shortly after 2 p.m. ET.
According to prepared remarks, Powell reiterated that the "recovery is far from complete," bolstering the case for a staunchly accommodative policy stance from the Fed, while also acknowledging that the recovery to this point has "progressed more quickly than generally expected" in the U.S. Yellen delivered similar points, suggesting that "we should be clear-eyed about the hole we're digging out of," as the economy remains about 10 million jobs short of its pre-pandemic levels.
Powell's latest remarks add to a constellation of data coming out of the Fed as of late, with the central bank's latest monetary policy decision having come out less than a week ago. While the Fed has remained resolute in its messaging that it is too early to even begin considering slowing their asset purchase program or raising interest rates, markets have suggested they need more convincing. Treasury yields climbed by about 60 basis points over the past two months in anticipation of both a strong economic recovery and of inflation, which some believe might come in faster and prove more sustained than expected and force a near-term Fed move.
"I think what the overall market is missing is that there’s a big difference between a temporary price increase and a sustained process of inflation. So what investors are reacting to now, is some statements by the Federal Reserve that they are prepared to run the economy a little bit hot for a period of time as a way of jumpstarting the economy back from all the scarring that we’ve had as a result of COVID," Cheryl Smith, Trillium Asset Management portfolio manager, told Yahoo Finance.
"And because the market – the bond market in particular – is still very sensitized to inflation 30 years after we last had substantial inflation, they are looking for every single possible place that they can find a price going up, and looking at it and jumping up and down and saying, 'Wow, there’s inflation, it’s going to happen,'" she added. "We’ve been looking for it for 14 years, it hasn’t shown up. I really think the bond market is entirely too freaked out about this and really wants the Fed to go back to the old policy, that at any moment that you saw the slightest hint of inflation, to just shut down the labor market. And that’s really the wrong policy for now."
4:03 p.m. ET: Dow drops 309 points, or 0.9%, for worst day in nearly three weeks as energy, bank stocks slide
Here were the main moves in markets as of 4:03 p.m. ET:
S&P 500 (^GSPC): -30.07 (-0.76%) to 3,910.52
Dow (^DJI): -307.65 (-0.94%) to 32,423.55
Nasdaq (^IXIC): -149.84 (-1.12%) to 13,227.70
Crude (CL=F): -$4.02 (-6.53%) to $57.54 a barrel
Gold (GC=F): -$11.90 (-0.68%) to $1,726.20 per ounce
10-year Treasury (^TNX): -4.6 bps to yield 1.6380%
2:20 p.m. ET: Stocks hold lower after Powell, Yellen hearing ends
Stocks remained lower Tuesday afternoon as House Financial Services Committee's hearing with Powell and Yellen concluded.
Materials, industrials and energy stocks lagged, while utilities and consumer staples outperformed in the S&P 500. The blue-chip index dipped just slightly in the afternoon session, falling 0.1%.
1:05 p.m. ET: Card spending jumps after stimulus payments reach consumers: JPMorgan
Consumers are quickly spending money directed to them via the $1.9 trillion virus-relief package Congress enacted earlier this month, according to credit card spending data from JPMorgan Chase. Most Americans received $1,400 direct checks as part of the package.
Spending on Chase credit cards jumped by 23.9% year-over-year in.the week ended March 19, according to new data JPMorgan Chase released on Wednesday. Year-over-year growth rates on card spending had hovered below 10% in January, for comparison.
Some of the biggest gains in spending took place at supermarkets, with a rise of 8.2%, and wholesale clubs and discount stores with a rise of 23.7%.
12:09 p.m. ET: Stocks trade lower as Powell, Yellen hearing kicks off
Stocks traded slightly lower Tuesday afternoon as the U.S. House Financial Services Committee began its hearing with Powell and Yellen.
Here's where markets were trading after noon in New York:
S&P 500 (^GSPC): -0.39 points (-0.01%) to 3,940.20
Dow (^DJI): -29.68 points (-0.09%) to 32,701.52
Nasdaq (^IXIC): -38.3 points (-0.29%) to 13,338.53
Crude (CL=F): -$2.71 (-4.4%) to $58.85 a barrel
Gold (GC=F): -$10.00 (-0.58%) to $1,728.10 per ounce
10-year Treasury (^TNX): -3.1 bps to yield 1.651%
10:25 a.m. ET: New home sales plunge by the most since 2013 in February amid harsh weather
New home sales slumped by the most in 8 years in February as harsh winter weather blanketed much of the country last month, crimping home-buying.
Sales of new home declined by 18.2% to a seasonally adjusted annual rate of 775,000 in February, according to the Commerce Department. this followed a downwardly revised rise of 3.2% during the prior month. Consensus economists were looking for new home sales to fall by just 5.7%, according to Bloomberg data.
9:48 a.m. ET: Stocks have seen their best 12 months since 1936
Tuesday marks the one-year anniversary of the pandemic-era low on March 23, 2020, when the S&P 500 sank to 2,237.4 as uncertainty around the COVID-19 crisis hit fever pitch.
In the year since, the S&P 500 has rallied 76%, marking its best one-year gain in 85 years. Unprecedented levels of monetary and fiscal stimulus helped support the rebound off last year's nadir in the markets.
"The S&P 500 has now seen its largest 12-month gain since 1936, exceeding that seen in 2010 after the GFC [global Financial Crisis]," Deutsche Bank strategist Jim Reid wrote in a note. "The turnaround started 2 days after the Fed’s momentous March 22, 2020 meeting where amongst other things they offered to buy corporate bonds for the first time in their history."
9:30 a.m. ET: Stocks open lower, Dow sheds 100+ points
The three major indexes extended earlier losses and opened to the downside Tuesday morning. The Dow underperformed, shedding 100 points, or 0.3%, as cyclical bank and industrial stocks came under more pressure to unwind gains from earlier this year. The Nasdaq hovered near the flat line, dropping fewer than 10 points, or less than 0.1%.
7:30 a.m. ET Tuesday: Stock futures point to a lower open
Here were the main moves in markets as of 7:29 a.m. ET Tuesday:
S&P 500 futures (ES=F): 3,915.5, down 14.5 points or 0.37%
Dow futures (YM=F): 32,484.00, down 135.00 points or 0.41%
Nasdaq futures (NQ=F): 13,065.00, down 6.75 points or 0.05%
Crude (CL=F): +$2.40 (-3.9%) to $59.16 a barrel
Gold (GC=F): +$2.10 (+0.12%) to $1,740.20 per ounce
10-year Treasury (^TNX): -4 bps to yield 1.642%
6:04 p.m. ET Monday: Stock futures rise
Here's where markets were trading as the overnight session kicked off on Monday:
S&P 500 futures (ES=F): 3,934.00, up 4 points or 0.1%
Dow futures (YM=F): 32,656.00, up 37 points or 0.11%
Nasdaq futures (NQ=F): 13,075.00, up 3.25 points or 0.02%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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