U.S. stocks opened lower on Tuesday, sending back some of their previous gains. This came ahead of testimony from Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen.
Powell will reiterate the Fed’s plan to support the recovery. It will be “for as long as it takes”, according to his prepared testimony. He also acknowledged that the recovery had progressed more quickly than expected.
Later Tuesday, the Fed chief and Yellen will appear before the House Financial Services Committee. That will start two days of congressional hearings with the objective of assessing the economic policy response to the pandemic crisis.
The Fed’s first interest rate hike comes before 2024. Financial markets have started to position for this hike, as the Fed guided at its last meeting.
This was on the belief that the recently approved “rocket fuel” stimulus will overheat the economy. That’s when combined with the very accommodative easy money policy.
Stocks on the Move
The Dow Futures contract lost 140 points, or 0.4% at 7:05 AM ET (1105 GMT). The S&P 500 Futures traded 15 points, or 0.4% lower. The Nasdaq 100 Futures fell 15 points or 0.1%.
On Monday, the Dow Jones Industrial Average closed 0.3% higher. The S&P 500 ended up 0.7%, or around 1% off its record closing high. Moreover, the Nasdaq Composite closed up 1.2%.
On Tuesday, U.S. stock index futures slipped as energy stocks dropped. Remarks from Fed Chair Jerome Powell and Treasury Secretary Janet Yellen were much-awaited. Investors were eager for clues on the pace of the economic rebound.
Chevron Corp, Occidental Petroleum Corp, and Exxon Mobil Corp lost between 1.5% and 3.5% premarket. Oil prices fell 3% lower on fears that new pandemic curbs and slow vaccine rollouts in Europe will also slow recovery in demand.
Travel-related stocks slipped between 1.6% and 3.9%. These include United Airlines Holdings, American Airlines, Royal Caribbean Cruises Ltd, and Carnival Corp.
In addition, on Monday, Wall Street’s main indexes rallied as tech-focused stocks caught a bid. They came under pressure since February 2021 as their valuations looked stretched due to a spike in bond yields.
Easing between 0.2% and 0.7% from the previous session’s high were Apple Inc., Facebook Inc, and Microsoft Corp.
The Dow E-minis lost 171 points or 0.52% at 6:35 a.m. ET. The S&P 500 E-minis edged down 19.75 points or 0.5%. The Nasdaq 100 E-minis fell 43 points or 0.33%.