US open: Modest gains ahead of Powell testimony
By Iain Gilbert
Date: Tuesday 22 Sep 2020
(Sharecast News) - Wall Street trading got off to a mostly positive start on Tuesday ahead of testimony from Federal Reserve Chairman Jerome Powell later in the day.
As of 1520 BST, the Dow Jones Industrial Average was up 0.06% at 27,165.18, while the S&P 500 was 0.42% firmer at 3,294.86 and the Nasdaq Composite started out the session 0.59% stronger at 10,842.79.
The Dow Jones opened 17.48 points higher on Tuesday, halting losses recorded in the previous session as Chinese trade relations, a potential second wave of the Covid-19 pandemic and stimulus negotiations were all in focus.
Tuesday's main focus will be Powell's testimony before the House of Representatives Financial Services Committee at 1530 BST. Powell will tell the House that the Fed stands ready to use all of the tools at its disposal to assist the recovery of the economy and limit the lasting damage from the Covid-19 pandemic's effect on the nation.
News that Donald Trump would announce his Supreme Court nominee to replace the recently deceased Ruth Bader Ginsburg on Saturday was also in focus amid concerns around how her death will affect ongoing stimulus negotiations on Capitol Hill.
Oanda's Craig Erlam said: "Stimulus will be a hot topic in the US today as Fed Chairman Jerome Powell and Treasury Secretary Steve Mnuchin appear before the House Financial Services Committee. With the Fed having done an extraordinary job in stabilising the financial system and providing huge amounts of monetary stimulus, even adjusting its framework last month to allow rates to remain lower for longer, emphasis will likely fall on fiscal measures, or lack thereof.
"Powell has repeatedly called for more stimulus to support the recovery but Congress has failed to find a compromise and hopes for a deal before the election are fading fast. That will leave households and businesses without support going into a troublesome winter period and could come with significant economic consequences."
Chicago Fed President Charles Evans actually cautioned earlier in the day that every month that passes without additional fiscal support from the White House risked "recessionary dynamics".
Investors were also keeping a keen eye on headlines from across the pond after British prime minister Boris Johnson said the UK was at a "perilous turning point" in its battle against the Covid-19 pandemic and announced further restrictions on businesses and Britons.
On the macro front, existing home sales rose 2.4% in August to a seasonally adjusted rate of 6.0m units, according to the National Association of Realtors. Sales were 10.5% higher year-on-year, marking the highest sales pace since December 2006, before the Global Financial Crisis.
Elsewhere, the Richmond Federal Reserve Bank's manufacturing index increased from 18 in August to 21 in September, well ahead of expectations for a reading of 12 and buoyed by increases in the indicators for new orders and employment.
No major corporate earnings were slated for release on Tuesday.
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