By Joe Wallace and Paul Vigna
U.S. stock wavered Tuesday, continuing a bout of volatility that
has tested investors' confidence in the market's monthslong
The S&P 500 and Nasdaq Composite edged up 0.1%, while the
Dow Jones Industrial Average was down 0.3%. The moves come one day
after equities retreated sharply, pushing the S&P 500 to a
fourth straight day of losses, the longest losing streak for the
broad gauge since late February. After a blistering summer rally,
stocks have cooled this month.
"We went too far, too fast," said Lindsey Bell, the chief
investment strategist at Ally Invest. "I don't think any of this
should be a surprise."
The turbulence entered a new phase Monday, when shares in
sectors that are highly sensitive to economic growth, such as
banks, materials and industrials, endured the biggest declines.
Technology stocks, whose swings had weighed on markets in recent
Investors are contending with a clutch of risks that are
intertwined. New cases of coronavirus are increasing in Europe, and
reported new cases increased sharply in the U.S. on Monday, to
52,000. That was the highest single-day increase since Aug. 14,
according to Johns Hopkins University.
A second wave of infections would hamper the economic recovery,
which may be damaged further if Congress does not pass another
relief package to provide additional unemployment benefits.
"It's key to the U.S. economy that the unemployment benefits
continue to be delivered to the consumers, the households," said
Sophie Chardon, cross-asset strategist at Lombard Odier. "Consumer
confidence is still very fragile."
But the odds of a new relief package went down after Supreme
Court Justice Ruth Bader Ginsburg passed away on Friday. The
political fight over the court could also have an impact on the
presidential election, and money managers must also think about the
possibility of a protracted period of uncertainty following the
"The volatility will continue for a little while longer," said
Andrew Sheets, chief cross-asset strategist at Morgan Stanley.
Ultimately, the turbulence is likely to be a blip in a long-running
bull market, he said. But for now, "investors should keep their
powder dry" and not seek to buy stocks at discounted prices, Mr.
In Washington, Federal Reserve Chairman Jerome Powell and
Treasury Secretary Steven Mnuchin testified on Capitol Hill about
the government's pandemic response.
In prepared remarks published Monday, Mr. Powell suggested
Congress would need to spend more to shore up struggling parts of
the economy. "The path forward will depend on keeping the virus
under control, and on policy actions taken at all levels of
government," he said.
For now, stock traders are paying close attention to technical
levels, Ms. Bell said. On Monday, the market's downswing halted as
the S&P 500 came close to correction territory, or a 10% loss
from a recent high. She expects traders will keep a close eye on
that and other technical indicators, like the 100- and 200-day
"This has been a technically driven market through the entire
rebound," she said. "I expect that to continue."
Consumer stocks, both discretionary and staples, were leading
the rebound on Tuesday. Shares of major technology companies,
including Amazon.com, Facebook and Apple, were rising, though the
tech sector itself was roughly flat.
The yields on the 10-year Treasury note ticked down to 0.663%,
from 0.670% Monday. The WSJ Dollar Index, which tracks the U.S.
currency against a basket of others, edged up 0.4%, a day after it
notched its biggest one-day advance in over a month.
International stock markets were mixed. The Stoxx Europe 600
gained 0.5%, clawing back some ground after suffering its biggest
fall since mid-June.
Asian markets followed U.S. shares lower. The Shanghai Composite
Index fell 1.3% by the close, while South Korea's Kospi shed
Commodity markets steadied, with U.S. crude futures up 0.4% to
$39.65 a barrel and gold futures down 0.1% to $1,909.50 a troy
Write to Joe Wallace at Joe.Wallace@wsj.com and Paul Vigna at
(END) Dow Jones Newswires
September 22, 2020 11:48 ET (15:48 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.