By Joe Wallace and Paul Vigna
U.S. stock rose Tuesday, stabilizing after a bout of volatility
that has tested investors' confidence in the market's monthslong
The S&P 500 added 0.7% and the Nasdaq Composite rose 1.1%,
while the Dow Jones Industrial Average was up 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.
All three indexes are down at least 5% from their peaks earlier
"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 doesn't 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 died 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 election.
"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 discretionary, communication services, utilities and
tech were leading the rebound on Tuesday. Shares of major
technology companies, including Amazon.com, Apple and Facebook,
The swirl of current events are creating short-term chaos in the
market, but Tuesday's rebound shows it's not scaring off all
investors. For long-term investors, in fact, it's time to buy, said
Kenny Polcari, managing partner at Kace Capital Advisors.
"It's good to shake the trees," he said. "You see who the weak
ones are, who are not really committed, like the Robinhood
traders," he said.
What investor should be focused on, he said, is the long-term
fundamentals. Until those change, there's no reason to be overly
concerned and the selloff just makes good companies cheaper to
"Apple's down 20% in the last few weeks? For me that's a
screaming opportunity," he said.
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 0.2%, 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 were mixed. U.S. crude futures rose 0.6% to
$39.79 a barrel and gold futures fell 0.1% to $1,898.60 a troy
Write to Joe Wallace at Joe.Wallace@wsj.com and Paul Vigna at
(END) Dow Jones Newswires
September 22, 2020 15:20 ET (19:20 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.