Dow logs third day of losses ahead of Powell testimony
The Dow recorded its third day of losses in a row on Tuesday, as investors anxiously wait to hear from Federal Reserve Chairman Jerome Powell.
The Dow closed 0.1%, or 23 points, lower. It was the only major US stock index that ended the day in the red.
Both the S&P 500 and the Nasdaq had started the day weaker but eked out gains by the end of the session. The S<><><><><><><><><><><><><><><><><><><>P 500 closed 0.1% higher, while the Nasdaq Composite finished up 0.5%. Both indexes snapped a two-day losing streak./ppThe Nasdaq was in part boosted by the 35% jump in the shares of Acacia Communications after Cisco Systems announced it would buy the company for $2.6 billion./ppBut outside the tech world, sentiment remains stale. It’s the third day in a row that stocks started the session lower./ppCall it Powell paralysis./ppMarket expectations for an impending interest rate cut to boost the economy were upset last week, when the jobs report showed a much healthier labor market than expected. The better the economy is doing, the less likely there is to be an interest rate cut. Should the Fed hold off on a cut, stocks would likely suffer, because lower interest rates are better for companies./ppNonetheless, the expectations for a cut at the July 31 central bank meeting remain at 100%, according to the CME’s FedWatch tool./ppPowell is due to deliver his bi-annual congressional testimony on Wednesday and Thursday, after speaking at an event on stress testing on Tuesday. Market participants will be parsing his comments for indications about the next policy update./ppThe ripple effect also impacts other financial assets. The dollar is strengthening on hopes that the Fed will not cut rates, despite the consensus expectation. Higher interest rates commonly make a currency more attractive to investors./ppBut a stronger greenback also tends to weigh on gold prices. The yellow metal has been rallying over the past weeks, but its gains have been temporarily derailed./ppThe yield on US Treasury bonds inched slightly higher. The 10-year bond last yielded 2.0631%, according to Refinitiv./p