U.S. stocks hovered around the flatline Tuesday, showing hints of calm after sharp swings tied to President Trump’s health condition.
The S&P 500 edged down 0.2%, while the Dow Jones Industrial Average gained less than 0.1% and the tech-heavy Nasdaq Composite slipped 0.6%. All three indexes fell Friday after Mr. Trump tested positive for Covid-19 before rebounding Monday as his health status appeared to improve.
Investors have been trying to assess the implications of both Mr. Trump’s illness and of the infection spreading among U.S. senators and top White House staff. Other factors in play include former Vice President Joe Biden’s lead in the polls, fresh waves of coronavirus infections, and discussion in Washington about a new economic relief package.
“People are waiting for the vote to pass, and expect volatility to increase,” said Seema Shah, chief strategist at Principal Global Investors. “This is not the right time to be making rash decisions about your positioning.”
Some analysts say that polls showing Mr. Biden could secure a decisive victory over Mr. Trump in November are helping buoy markets.
Investors had grown concerned in recent weeks about a narrow win for either candidate, which would escalate the risk of legal disputes and lead to a period of uncertainty in the days after the election. Some also say that a sweep by Democrats could increase the chances of a large fiscal-spending package after a new government is in place.
“A month or two ago, the market showed a preference for a Trump victory, and now the preference is for a Biden comprehensive win,” said Edward Park, chief investment officer of Brooks Macdonald.
Mr. Trump left the hospital with a cautious prognosis Monday after three days of treatment for Covid-19. His diagnosis created fresh uncertainty for his presidential campaign, and has complicated plans for his Supreme Court nominee. Senate Majority Leader Mitch McConnell canceled scheduled votes after several GOP senators tested positive, but he has said confirmation hearings for Judge Amy Coney Barrett are on track to begin on Oct. 12.
Cruise ship operators were among best performers Tuesday, with shares of
up 5.3% and Carnival up 4.6%. Large tech stocks dragged on the market, with Apple recently down 2.2%.
In bond markets, the yield on the benchmark 10-year U.S. Treasury note was recently 0.777%, according to Tradeweb, compared with 0.760% Monday. U.S. government bond yields reached their highest close since June on Monday, lifted by mounting hopes for new fiscal stimulus.
Bonds and stocks registered a muted response to Federal Reserve Chairman Jerome Powell’s latest comments on the economy. In remarks to be delivered at a virtual economic conference, Mr. Powell once again warned of the risks to the economy if Congress and the White House don’t provide additional support to households and businesses.
The U.S. posted its largest monthly trade deficit since 2006 in August, the Commerce Department said Tuesday, as imports of consumer goods recovered to pre-pandemic levels and exports of services and manufacturing products stalled. The data were released after International Monetary Fund Managing Director Kristalina Georgieva said the global economy won’t contract this year as severely as projected in June.
Overseas, the pan-continental Stoxx Europe 600 edged up 0.1%.
In Asia, stock markets posted modest gains by the close of trading. Japan’s Nikkei 225 ended trading up 0.5%, while Hong Kong’s Hang Seng Index climbed 0.9%. China’s Shanghai Composite Index remained closed for a holiday.
In commodities, Brent crude, the international energy benchmark, rose 2.2% to $42.58 a barrel.
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