The S&P 500 rose slightly on Tuesday, recovering some of
the steep losses from the previous session as shares of Big Tech advanced.
The broad-market index traded 0.2% higher and was on pace to
post its first gain in five sessions. The Nasdaq Composite advanced 0.3%. The
Dow Jones Industrial Average lagged, dropping 68 points, or 0.2%, as Goldman
Sachs and JPMorgan Chase each fell more than 1%.
Amazon shares rose 2.6% after a Bernstein analyst upgraded
the e-commerce giant to buy from hold, noting the recent pullback offers an
attractive “entry point” for investors. Facebook, Apple and Microsoft were also
higher.
Traders also digested remarks by Federal Reserve Chairman
Jerome Powell, who reiterated the central bank will support the economy “for as
long as it takes.”
Sentiment was kept in check, however, after U.K. Prime
Minister Boris Johnson announced further restrictions to curb the spread of the
virus. He noted the country was at a “perilous turning point” and ordered bars
and restaurants to close between 10 p.m. and 5 a.m. The restrictions also
expand the list of places requiring people wear a mask.
“Coronavirus concerns have resurfaced, worrying investors
that a reversal in reopening progress could be near,” Lindsey Bell, chief
investment strategist for Ally Invest, said in a note. “More and more
uncertainty is arising as we get closer to the election but no closer to
Congressional fiscal relief. But we’re still optimistic this dip will be bought
sooner rather than later.”
The market’s September sell-off intensified on Monday with
the Dow suffering its worst day since Sept. 8. The S&P 500 also posted its
first four-day losing streak since February.
Those losses were sparked in part by the prospects of
further U.S. coronavirus fiscal stimulus becoming bleaker as lawmakers brace
for a potentially bitter Supreme Court confirmation fight as President Donald
Trump rushes to nominate a successor to Justice Ruth Bader Ginsburg, who died
on Friday.
Chart showing the daily percent change in the Dow Jones
Industrial Average for the ten trading days ending September 21, 2020.
The major averages are on pace for steep losses for
September, a typically weak month for stocks. All three major averages had just
suffered three straight weeks of losses. The Dow and the S&P 500 have
fallen 4.8% and 6.2% this month, respectively, while the Nasdaq has dropped
8.2% as investors dumped high-flying tech giants.
“Market volatility is returning after months of steady
advances in risk assets, and we see elevated volatility ahead of the November
U.S. election,” Jean Boivin, head of BlackRock Investment Institute, said in a
note. “In addition, negotiations of a new U.S. fiscal package are dragging on,
the pandemic is still spreading in many countries, and U.S. China tensions are
running high.”
Shares of Tesla dropped 5.8% after CEO Elon Musk said in a
tweet that the electric carmaker’s “Battery Day” event would not reach “serious
high-volume production” until 2022, which disappointed investors and analysts.
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