Dow under pressure but tech sector rallies as investors await Powell, Mnuchin testimony on the coronavirus response

U.S. stock benchmarks mostly rose early Tuesday, though the Dow industrials slipped to start trade, as investors awaited 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
was 68 points, or 0.3%, lower at 25,525, those for the S&P 500 index
rose 3 points, or 0.1%, at 3,056, while the Nasdaq Composite Index
added 38 points, or 0.4%, at 9,913.

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 might look to glean some guidance from joint testimony from Powell and Mnuchin about the U.S.’s economic response to the global public health disaster. The two speak in front of the U.S. House of Representatives Financial Services Committee at 12:30 p.m. Eastern Time.

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, which is a requirement of 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.

In a separate hearing, public-health expert Dr. Anthony Fauci will testify in front of a Senate Committee on progress of returning to school and work amid the pandemic. The testimony will take place at 10 a.m.

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.

The Conference Board’s consumer confidence index will be released at 10 a.m. The market is expecting a reading of 90 according to consensus estimates from economists polled by Econoday.

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.
    gained 5.9% also on news it will acquire at-home fitness company Mirror for $500 million.

  • Shares of Conagra Brands Inc. rose more than 2% 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.
    is slated to report results after the close of trade Tuesday

  • Wells Fargo shares
    fell 1.5% 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.

  • Shares of Inovio Pharmaceuticals Inc.
    declined buy around 9%on Tuesday after the company said its COVID-19 vaccine candidate was considered safe and well-tolerated in all 40 of the participants in a Phase 1 clinical trial.

  • Papa John’s International Inc.
    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 3%.

How are other assets performing?

West Texas Intermediate U.S. crude
for August delivery slipped 70 cents, or 1.8%, at $39 a barrel on the New York Mercantile Exchange. In precious metals, gold futures
traded 40 cents, or less than 0.1%, lower at $1,781.90 an ounce.

rose $1.21 cents, or 3.1%, to close at $39.70

The 10-year Treasury note yield
was 1 basis point lower at 0.643%. Bond prices move inversely to yields.

The greenback was up 0.1% higher against a basket of its major rivals, based on trading in the ICE U.S. Dollar Index

In European equities, the Stoxx Europe 600 index
declined 0.3% and London’s FTSE 100
was trading 1% lower.

In Asian markets, the Japanese Nikkei
gained 1.2%, Hong Kong’s Hang Seng
picked up 0.5%, while South Korea’s Kospi climbed 0.7%. China’s CSI 300
rallied 1.3%, while the Shanghai Composite Index
advanced 0.8%.

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