Tech stocks pare deep losses but still decline as Fed's Powell eases concerns over runaway inflation
- US stocks pared losses but closed lower on Tuesday after Fed chair Jerome Powell staved off fears of rampant inflation.
- Stimulus and reopening could lift price growth, but the effect will likely be small and temporary, Powell said.
- Bitcoin tanked below $49,000 after trading as high as $55,053.91 Monday afternoon as investors snapped up crypto profits.
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US equities erased major losses and swung higher on Tuesday after commentary from Federal Reserve Chair Jerome Powell eased concerns of stronger-than-expected inflation.
Growth favorites tumbled immediately after the open as investors bet on Biden-backed stimulus to supercharge the US recovery. The increasing likelihood of a stimulus boost has revived fears of near-term inflation as fiscal support lifts consumer spending. Value stocks and small caps historically outperform momentum names as inflation rises.The rotation faded through the session as Powell testified to the Senate Banking Committee. New stimulus and economic recovery could lift inflation, but an uptick will likely be small and only temporary, Powell said, adding some reopening-fueled price growth is "a good problem to have."
Here's where US indexes stood at the 4 p.m. ET close on Tuesday:
- S&P 500: 3,881.35, up 0.13%
- Dow Jones industrial average: 31,535.44, up 0.04% (13.75 points)
- Nasdaq composite: 13,465.20, down 0.5%
The bounce-back marks a sharp reversal from the drop seen one session prior. Stocks closed mixed on Monday as inflation concerns pulled cash out of large-cap names and into reopening bets. The
AMC extended a two-day rally after New York Governor Andrew Cuomo announced movie theaters could reopen at 25% capacity in New York City next week.
Bitcoin plummeted as investors took profits from the cryptocurrency's latest run-up. The token hovered around $47,000 after trading as high as $55,053.91 Monday afternoon. To be sure, prices are still up roughly 55% year-to-date.Spot gold dipped as much as 0.77%, to $1,795.73 per ounce, at intraday lows before erasing most losses. The US dollar wavered against a basket of Group-of-20 currencies. Treasury yields edged higher as investors dumped the safe havens.
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