Stocks fell Tuesday but came off lows after Federal Reserve Chairman Jerome Powell assured investors the central bank was a long way from scaling back its ongoing support of U.S. economy.
The Dow Jones Industrial Average declined 83 points, or 0.26%, to 31,438, the S&P 500 fell 0.48% and the Nasdaq sank 1.28%.
Federal Reserve Chairman Jerome Powell, in testimony before the Senate Banking Committee on Tuesday, said the U.S. economy was “a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved.”
Powell signaled the central bank won’t soon begin tapering the $120 billion of bonds it has been buying per month. The Fed previously pledged to keep providing support to the U.S. economy “until substantial further progress” has been made toward its goals of maximum employment and 2% inflation.
The Fed chief said developments pointed “to an improved outlook for later this year. In particular, ongoing progress in vaccinations should help speed the return to normal activities.”
Stocks closed mostly lower Monday and the Nasdaq dropped 2.46% to a three-week low with rising bond yields increasing worries that high-growth stocks will be more vulnerable to inflation pressures.
Video: Stocks set to slide at open (CNBC)
The Nasdaq 100, the large-cap growth index, has closed lower for five straight days – its longest losing streak in four months. The S&P 500 also has finished with losses for five consecutive sessions.
Tesla was down about 4.5% in trading Tuesday, but had fallen as much as 13% to below the price at which it entered the S&P 500 in December. The stock has become closely linked to bitcoin, after the electric vehicle maker made a $1.5 billion investment in the digital token earlier this month. Bitcoin was falling 11% Tuesday to below $50,000.
The 10-year Treasury yield traded at 1.353% on Tuesday. Commodity prices continued to suggest a big rebound in global demand over the second half of the year, with copper extending recent gains.
Rising interest rates and fears of increasing inflation have put the brakes on strong gains made at the beginning of February. Despite recent losses, equities remain near all-time highs.
Richard Saperstein, chief investment officer of Treasury Partners, said unless there is a “sustained inflation surge, rising bond yields will have a minor impact on stocks.”
The U.S. topped 500,000 deaths from COVID-19 on Monday, a somber milestone that comes amid growing hopes that vaccination programs have begun to cut into the rate of infection and spread of the deadly disease.
Home Depot earned $2.65 a share in the fourth quarter, 2 cents higher than analysts’ estimates. Sales of $32.26 billion also beat forecasts.
The No. 1 home-improvement retailer, however, declined to offer a profit forecast for 2021 amid ongoing pandemic uncertainty.
This article was originally published by TheStreet.