Stocks were little changed Tuesday as Wall Street wrapped up its best quarterly performance in decades.
Shares of Wells Fargo ticked 1.4% lower after the bank said Monday it would likely slash its dividend in the third quarter to comply with the Federal Reserve stress test. Bank of America, Citi, JPMorgan and Goldman Sachs said their dividends would stay the same.
Stocks that would benefit from the economy reopening were also under pressure. Wynn Resorts slid 1.6% and United Airlines dropped 1.1%. Delta Air Lines traded 1.1% lower.
Those losses were capped in part by a 5.3% jump in Micron following the company’s better-than-expected earnings report. Micron gave strong forward revenue guidance. Shares of Lululemon gained 4% on news it will acquire at-home fitness company Mirror for $500 million.
Despite Tuesday’s decline, the major averages headed for their biggest one-quarter gains in years. Both the Dow and S&P 500 were on pace for their best quarterly performance since 1998, surging more than 16% each. The Nasdaq Composite, meanwhile, was up 28.2% quarter to date and was headed for its biggest quarterly gain since 2001.
“A combination of 1) Stimulus, 2) Positive trends in the virus, 3) Economic reopenings and 4) Hopes for a vaccine drove stocks higher in Q2,” wrote Tom Essaye, founder of The Sevens Report. “As we begin Q3, only one of those tailwinds is currently in place: Stimulus. That doesn’t mean we’ll see a correction, but be suspect of market rallies until we can add more forces supporting stocks, because we’re one stimulus disap-pointment away from an ugly day.
Wall Street was coming off sharp gains, with the Dow surging more than 500 points on Monday. The S&P 500 and Nasdaq also rallied more than 1%.
Those gains came amid a backdrop of increasing coronavirus cases in the U.S. and states attempt to reopen from the shutdown. U.S. governors are walking back or delaying reopening plans as Covid-19 cases climb around the country. New Jersey Gov. Phil Murphy announced the state will delay a resumption of indoor dining that was planned for Thursday.
Tuesday marked the last day of the month, with the major averages entering the session on pace for their third consecutive monthly gain. The Dow was up 0.4% for June through Monday’s close. The S&P 500 and Nasdaq were up 0.3% and 4.1%, respectively, month to date.
Federal Reserve chair Jerome Powell and Treasury Secretary Steven Mnuchin will testify before the House Financial Services Committee at 12:30 p.m. on Tuesday. The joint hearing will address the Fed and Treasury’s response to the coronavirus pandemic.
In remarks he will deliver Tuesday, Powell said uncertainty reigns over the outlook for the economy in the wake of the coronavirus pandemic.
“Output and employment remain far below their pre-pandemic levels. The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in containing the virus,” Powell said. “A full recovery is unlikely until people are confident that it is safe to reengage in a broad range of activities. “The path forward will also depend on the policy actions taken at all levels of government to provide relief and to support the recovery for as long as needed,” Powell added.
The Conference Board’s consumer confidence index will be released at 10 a.m. on Tuesday. Economists polled by Dow Jones are expecting a read of 91 in June, up from May’s reading of 86.6.