By Yasin Ebrahim
Investing.com – The Dow struggled for direction Tuesday as gains in tech were offset by weakness in financials. The resurgence of Covid-19 and ongoing uncertainty of fiscal stimulus hurt investor sentiment.
The Dow Jones Industrial Average was up 0.30%, or 80 points. while the Nasdaq Composite added 1.20% and theS&P 500 climbed 0.74%
Financials slipped more than 1%, led by a decline in bank stocks as Federal Reserve President Jerome Powell reiterated the central bank remains committed to using its tools “for as long as it takes, to ensure that the recovery will be as strong as possible, and to limit lasting damage to the economy."
Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS) and Bank of America Corp (NYSE:BAC) fell, with the latter down more than 2%.
Lower interest rates weigh on banks’ net interest margin -- the difference between the interest income generated by banks and the amount of interest paid out to their depositors.
Powell continued to caution on the outlook for the economy, stressing the importance of further fiscal stimulus from Congress to keep the recovery on track.
Following a “skinny” coronavirus aid bill rejection last week, the Problem Solvers Caucus, a group of 50 Democratic and Republican members of Congress, has proposed $1.5 trillion virus relief package to force lawmakers to reinitiate talks.
But progress has been hampered by the ongoing battle over the replacement of the late Supreme Court Justice Ruth Bader Ginsburg.
Strength in tech, however, underpinned investor optimism, with Amazon.com (NASDAQ:AMZN) leading the Fab 5 stocks, rising 4%, after an upgrade from Bernstein. Facebook (NASDAQ:FB), Alphabet (NASDAQ:GOOGL), Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) traded higher.
Overall investor sentiment, however, remained challenged by a resurgence in the spread of the virus.
In the U.K., Prime Minister Boris Johnson warned the country was at a “perilous turning point” and reversed the lifting of some lockdown measures in England. While the U.S. reported 52,000 new cases on Monday, the highest single-day increase since Aug. 14, according to Johns Hopkins University.
In other news, Tesla (NASDAQ:TSLA) fell more than 4% after the chief executive Elon Musk tempered investor expectations ahead of the company’s ‘Battery Day,’ which kicks off later today.