Stocks fall, U.S. dollar up ahead of Powell testimony

Awaiting Wednesday’s congressional testimony from Fed Chair Powell, all the indexes pulled back today, especially in the morning with the Dow down almost 400-points by 10 a.m. Then all recovered to almost break-even by close, the Dow being the exception losing 245 points.  If Powell indicates a continued firm stance that more rate hikes are coming, that could well stabilize the dollar after last week’s declines. Investors are also looking at China’s move today to cut its rates.  Volume was 11.3 billion. 

Stocks fall, U.S. dollar up ahead of Powell testimony

By Caroline Valetkevitch

June 20, 2023  4:44 PM

DJ: 34,299.12  -108.94         NAS: 13,689.57  -93.25         S&P: 4,409.59  -16.25      6/16

DJ: 34,053.87  -245.25         NAS: 13,667.29  -22.28         S&P: 4,388.71  -20.88      6/20

NEW YORK, June 20 (Reuters) - Global stock indexes fell and the dollar index inched up on Tuesday as investors weighed the U.S. interest rate outlook ahead of Federal Reserve Chair Jerome Powell's congressional testimony.  U.S. Treasury yields eased.  Adding to uncertainty over the rate outook, a report showed groundbreaking on U.S. single-family homebuilding projects surged in May by the most in more than three decades and permits for future construction also rose.  After lifting rates by 5 percentage points since March 2022, the Fed this month took a breather to assess the effects of its actions. Rate hikes could resume next month, however, with inflation still too high.  Powell's testimony before the U.S. House of Representatives' Financial Affairs Committee is due Wednesday.

"If Mr. Powell remains adamant that the central bank is not done raising interest rates to crush inflation, that could help the dollar stabilize after the big declines we saw last week," said Joe Manimbo, senior market analyst at Convera.  Against a basket of six major currencies, the dollar was up 0.06% on the day.  The Australian dollar fell after its latest central bank meeting minutes showed that keeping interest rates unchanged had been under consideration.

Investors also were digesting China's move to cut its benchmark loan prime rates (LPR) for the first time in 10 months on Tuesday. Among Beijing's moves to stimulate the country's slowing recovery, the People's Bank of China lowered the medium-term lending facility rate on Thursday.  Energy (.SPNY) led declines among the major S&P 500 sectors, with oil prices falling on a mixed demand outlook from China.

On Wall Street, the Dow (.DJI) fell 245.25 points, or 0.72%, to 34,053.87 ; the S&P 500 (.SPX) lost 20.88 points, or 0.47%, at 4,388.71 ; and the Nasdaq Composite (.IXIC) dropped 22.28 points, or 0.16%, to 13,667.29 .

U.S. markets were closed for a public holiday on Monday.

The pan-European STOXX 600 index (.STOXX) lost 0.59 % and MSCI's gauge of stocks across the globe (.MIWD00000PUS) shed 0.55 %.  U.S. Treasury yields fell, in line with declines in Europe, as investors priced in expectations that the Fed may be near the end of its rate-hiking cycle. The yield on 10-year Treasury notes was down 4.4 (bps) at 3.724%. 

Per the CBOE, 11.3 billion shares were traded.