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US open: Mixed start to trading as Powell prepares for second day of testimony

By Iain Gilbert

Date: Wednesday 23 Sep 2020

US open: Mixed start to trading as Powell prepares for second day of testimony

(Sharecast News) - Wall Street trading got off to a mixed start on Wednesday amid heightened restrictions to stem Covid-19 cases in Europe and an ongoing stalemate in negotiations for a second stimulus bill.
As of 1530 BST, the Dow Jones Industrial Average was up 0.21% at 27,346.09, while the S&P 500 was 0.22% weaker at 3,308.14 and the Nasdaq Composite came out the gate 0.62% softer at 10,895.41.

The Dow opened 57.91 points higher on Wednesday, slightly extending yesterday's gains.

As lawmakers remained at an impasse on stimulus talks in Washington, Federal Reserve Chairman Jerome Powell warned that the US economy may very well begin to decelerate in coming months if Congress fails to provide further fiscal stimulus to average Americans.

Powell cautioned Congress' select subcommittee that many economic forecasts relied on fiscal action but also sought to reassure market participants that the Fed would support the economy "for as long as it takes".

News that British Prime Minister Boris Johnson had moved to tighten economic restrictions and public health measures in the UK as part of an effort to slow the spread of Covid-19 were also weighing on sentiment after the PM warned the nation had reached a "perilous turning point", while tensions between Washington and Beijing were also in focus after Donald Trump told the UN General Assembly that China was to blame for "unleashing" Covid-19 onto the world at large.

On the macro front, mortgage applications rose 6.8% across the US in the week ended 18 September, according to the Mortgage Bankers Association, while applications to refinance a home loan increased 8.8% and homebuyer mortgage applications advanced 3.4%.

Elsewhere, July's house price index rose 0.9% year-on-year, according to the Federal Housing Finance Agency, well ahead of the 0.3% expected by analysts.

Lastly, IHS Markit's composite flash PMI revealed that business activity had dipped in September, suggesting a deceleration in economic momentum as its composite PMI output index slipped to a reading of 54.4 this month from 54.6 in August. On the other hand, the flash manufacturing PMI increased to 53.5 from 53.1 in August.

Federal Reserve chairman Jerome Powell will again testify in front of the Committee on Banking, Housing, and Urban Affairs, while Fed presidents Loretta Mester, Charles Evans and Randall Quarles will all deliver comments throughout the course of the day.

In corporate news, sportswear giant Nike posted better-than-expected earnings overnight, driven by an 82% uplift in digital sales, while Tesla shares were under pressure despite CEO Elon Musk saying he expects full-year vehicle deliveries to increase by 30-40% year-on-year.

Johnson & Johnson shares were also in focus after the pharmaceutical firm launched a global Phase III trial of its Covid-19 vaccine candidate.


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