The blue-chip Dow Jones Industrial Average held steady on Tuesday after posting its best day since March, while the broader S&P 500 fluctuated within 1% of a record.
The 30-stock Dow rose 20 points. The S&P 500 last traded 0.2% higher, sitting just 0.8% below its all-time high. The Nasdaq Composite inched up 0.1%.
Bitcoin briefly broke below $30,000 on Tuesday to trade at its lowest level in more than five months as losses accelerated with intensified crackdown efforts by China. With Tuesday’s drop, the world’s largest crypto currency also turned negative on the year at one point.
Alphabet shares traded slightly lower after the European Commission opened a probe into Google’s advertising unit.
On Monday, the blue-chip Dow gained 580 points for its best day since March 5 as shares tied to the economic recovery snapped back from last week’s sell-off induced by the Federal Reserve’s updated projections on inflation and interest rate hikes.
“This is a precarious time — stocks have gone a relatively long period without any major sell-off, and there is heightened sensitivity to every utterance from the Fed as it attempts to transition to the start of normalization,” Invesco Chief Global Market Strategist Kristina Hooper said in a note.
Fed Chairman Jerome Powell will testify before the House of Representatives Tuesday on the central bank’s response to the pandemic. His remarks, which were released ahead of the hearing Monday evening, are likely to support the notion that the Fed is ready to soon start discussing removing some of its unprecedented stimulus measures enacted during the pandemic.
“Since we last met, the economy has shown sustained improvement,” Powell will say Tuesday, according to the Fed release. “Widespread vaccinations have joined unprecedented monetary and fiscal policy actions in providing strong support to the recovery. Indicators of economic activity and employment have continued to strengthen, and real GDP this year appears to be on track to post its fastest rate of increase in decades.”
“Inflation has increased notably in recent months,” Powell will say. But the Fed chief will note that most of those are a temporary effect and that inflation should settle back to 2% over the long term.
Powell’s testimony begins at 2 p.m. ET.
Major averages are coming off a sharp rebound as investors weigh the economic reopening and Federal Reserve policy.