Stocks finished higher Tuesday as gains in the tech sector offset warnings from Federal Reserve Chairman Jerome Powell that a U.S. recovery from the coronavirus pandemic “continues to be highly uncertain.”
The Dow Jones Industrial Average finished up 140 points, or 0.52%, to 27,288, the S&P 500 rose 1.05% and the Nasdaq gained 1.71%.
Shares of Amazon.com (AMZN) – Get Report ended up 5.7% near $3,129 after Bernstein analyst Mark Shmulik upgraded the tech and online-retail giant to outperform from market perform with an unchanged price target of $3,400.
Powell, in testimony before the House Financial Services Committee, said the “path forward will depend on keeping the virus under control, and on policy actions taken at all levels of government.”
He added that “both employment and overall economic activity … remain well below their pre-pandemic levels, and the path ahead continues to be highly uncertain.”
The U.S. reached a grim milestone Tuesday when the number of coronavirus deaths surpassed 200,000, according to Johns Hopkins University.
In the U.K., Prime Minister Boris Johnson urged people to continue to work from home as coronavirus infections in Europe’s second-largest economy have surged.
Powell was joined by U.S. Treasury Secretary Steven Mnuchin, who told the congressional panel the White House has continued to work with Democrats on further U.S. stimulus.
“The president and I remain committed to providing support for American workers and businesses,” Mnuchin said. “I believe a targeted package is still needed, and the administration is ready to reach a bipartisan agreement.”
The S&P 500 had been on a four-day losing streak amid a host of investor worries including an increase in global coronavirus cases worldwide, dimming prospects for more fiscal aid from Congress and volatility related to the U.S. presidential election.
“I am not at all surprised by the recent market volatility. The lack of new fiscal stimulus, unclear direction over coronavirus policy and now an intense Supreme Court-related political battle is causing a new level of angst in the markets,” said Kenny Polcari, managing partner at Kace Capital Advisors.
“Both political parties are now in a full flight with just a few weeks until Election Day. The U.S. election has begun to spin out of control.”
Powell said the U.S. economy “will recover fully from this difficult period,” but more fiscal stimulus will be needed to prevent long-term damage from the coronavirus pandemic.
“Economic activity has picked up from its depressed second-quarter level, when much of the economy was shut down to stem the spread of the virus. Many economic indicators show marked improvement,” Powell said.
Tesla (TSLA) – Get Report fell 5.6% Tuesday to $424.23 after Chief Executive Elon Musk tweeted the electric-vehicle maker plans to boost battery cell purchases from suppliers and foresees “significant shortages in 2022 & beyond unless we also take action ourselves.”
The tweets came ahead of Tesla’s widely anticipated Battery Day event Tuesday, at which the company is expected to reveal new battery-cell technology that significantly boosts battery life.
In his tweets, Musk said that notwithstanding the announcement, Tesla intends to increase purchases of battery cells from third-party suppliers.
The announcement pertains more to long-term production, particularly for semi, cybertruck and roadster vehicles and won’t reach high-volume production until 2022, Musk tweeted.