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U.S. Stocks Edge Higher After Turbulent Session

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09/22/2020 | 11:17am EDT

By Joe Wallace

U.S. stock edged higher Tuesday, steadying after a bout of volatility that tested investors' confidence in the market's monthslong rebound.

The S&P 500 rose 0.1%, and the Nasdaq Composite gained 0.2%. The Dow Jones Industrial Average swung between small gains and losses. The rebound comes 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.

Stocks have gyrated in September, after marching higher for much of the summer. 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 weeks, advanced.

Investors say they are contending with a clutch of risks, including the dwindling chances that lawmakers agree on a second round of economic relief before the November election. Money managers are also increasingly concerned about the possibility of a protracted period of uncertainty following the election.

Surging cases in Europe have knocked confidence in the world economy's recovery from the downturn sparked by coronavirus. Reported new cases increased sharply in the U.S. Monday, to 52,000. That was the highest single-day increase since Aug. 14, according to Johns Hopkins University.

"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. Sheets added.

Shares of major technology companies including Amazon.com, Facebook and Apple advanced in early trading.

In prepared remarks published Monday ahead of Federal Reserve Chairman Jerome Powell's scheduled testimony on Capitol Hill, the policy maker 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," Mr. Powell said.

Mr. Powell is due to testify to the House Financial Services Committee alongside Treasury Secretary Steven Mnuchin, starting at 10:30 a.m. ET.

Investors are also worried that the rebound in consumer spending will go into reverse without a new deal among U.S. lawmakers to provide additional unemployment benefits. Extra benefits approved by Congress near the start of the pandemic expired at the end of July. In early August, President Trump issued an executive action allowing states to tap disaster-relief funds for $300 a week in enhanced aid.

"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."

Yields on 10-year Treasury notes ticked down to 0.668%, from 0.670% Monday, ahead of Mr. Powell's testimony. The WSJ Dollar Index, which tracks the U.S. currency against a basket of others, edged up less than 0.1%, a day after it notched its biggest one-day advance in over a month.

International stock markets were mixed. The Stoxx Europe 600 gained 0.6%, 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 2.4%.

Commodity markets steadied, with U.S. crude futures rose 1.2% to $40.01 a barrel and gold futures ticked up 0.5% to $1,919.50 a troy ounce.

Write to Joe Wallace at Joe.Wallace@wsj.com

 


Stocks mentioned in the article
ChangeLast1st jan.
DJ INDUSTRIAL 0.52% 26659.11 Delayed Quote.-6.59%
KOSPI COMPOSITE INDEX -0.57% 2328.48 Real-time Quote.5.89%
NASDAQ 100 1.87% 11350.743252 Delayed Quote.32.82%
NASDAQ COMP. 1.64% 11185.592838 Delayed Quote.27.40%
S&P 500 1.19% 3310.11 Delayed Quote.2.46%
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