All three major U.S. stock indexes bounced back from steep losses on Tuesday and closed the session in positive territory after U.S. Federal Reserve Chair Jerome Powell eased some of the concerns about higher interest rates and inflation.
The U.S. economic recovery “remains uneven and far from complete”, Powell told a committee of U.S. senators on Tuesday.
At the finishing bell, on the New York Stock Exchange (NYSE), the Dow Jones Industrial Average wiped out a -360-point loss and closed +15.66 points higher, or +0.05%, to 31,537.35.
The broad-based Standard & Poor’s 500 Index reversed a -1.8% loss and ended the day eking out +4.87 points, or a +0.13% gain to 3,881.37.
The rich-tech Nasdaq Composite index fell -67.85 points, or -0.50% to 13,465.20 after dropping as much as -3.9% earlier.
Tesla closed -2.2% lower after sliding as much as -13% earlier.
The electric car maker suffered a -9% decline in the previous session.
Apple’s stock dipped just -0.11% after falling -6% earlier.
Meanwhile, Bitcoin displayed a volatile 24-hour session after plummeting -16.6% to $US45,093.8 before showing a mild bounce.
In his semi-annual update on monetary policy, his first delivered under Joe Biden’s presidency, Powell indicated the Fed would not be changing monetary policy any time soon, given the slow recovery in the labour market.
During Powell’s testimony, Republicans pushed the chairman to address their concerns that Biden’s $1.9tn economic stimulus plan, which Democrats are trying to push through Congress this week, will lead to high inflation.
Powell, as he has done in recent weeks, downplayed their concerns over aid sparking inflation.
“This is not a problem for this time, as near as I can figure,” Powell said, noting that the Federal Reserve has tools to challenge rising inflation rates should they be seen.
Powell emphasized the top priority for reviving the economy should be to continue vaccination efforts, which “offer hope for a return to more normal conditions later this year”.
On Wednesday, Powell’s visit to Capitol Hill will continue when he addresses the House of Representatives Financial Services Committee.
Investors will also look at the construction industry with data on new home sales and an earnings report from Lowe’s.