U.S. stocks fell on Tuesday as investors digested testimony by Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen about the U.S. economy.
The S&P 500 ticked down 30.07 points, or 0.8%, to 3910.52. The Nasdaq Composite fell 149.85 points, or 1.1%, to 13227.70. The Dow Jones Industrial Average fell 308.05 points, or 0.9%, to 32423.15.
Both Mr. Powell and Ms. Yellen said they expect a strong economic rebound this year following the vaccine rollout, but emphasized that the U.S. recovery is far from complete. Mr. Powell also said he doesn’t expect the $1.9 trillion stimulus package will lead to an unwelcome increase in inflation, but he emphasized that the central bank has tools to deal with rising price pressures if necessary.
Investors are also reassessing their expectations for a fast and widespread global recovery, which had led to rising bets earlier this year that companies sensitive to an economic recovery would benefit. Rising Covid-19 cases in Europe and recent extensions to lockdowns in Germany, France and Italy are also weighing on sentiment.
“It feels like the reflation theme is running into a few roadblocks,” said Sebastian Mackay, a multiasset fund manager at Invesco. “We are probably in a cyclical recovery, but we may have gotten ahead of ourselves. This is a pause for thought: How rapid is this recovery actually going to be?”
Read More: Stocks Drop Amid Powell’s Testimony