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Fed’s Powell hopeful US economy can return to ‘more normal conditions’ later in 2021

FILE PHOTO: U.S. Federal Reserve Chairman Jerome Powell speaks to reporters after the Federal Reserve cut interest rates in an emergency move designed to shield the world's largest economy from the impact of the coronavirus, during a news conference in Washington, U.S., March 3, 2020. REUTERS/Kevin Lamarque
Jerome Powell.
  • Vaccinations and falling case counts "offer hope for a return to more normal conditions later this year," Jerome Powell said.
  • The statement is among the most bullish to come from the Fed chair since the pandemic began.
  • Still, Powell warned the path forward is "highly uncertain" and the recovery "remains uneven."
  • Visit the Business section of Insider for more stories.

Encouraging trends are lifting hopes that the US can make strides toward pre-pandemic normalcy later this year, Federal Reserve Chair Jerome Powell said Tuesday.

Data suggests the US is clearing the deadliest wave of the pandemic yet. Daily case counts are the lowest since October and hospitalizations have more than halved from their early January highs. The country's rate of vaccination, while down from its peak, remains well above the Biden administration's 1-million-doses-per-day target.

The falling cases and vaccine distribution "offer hope for a return to more normal conditions later this year," Powell said while testifying to the Senate Banking Committee on Tuesday.

The bullish statement is among the Fed chair's most positive since the pandemic rocked the economy in spring 2020. Separately, central bank officials said during a January meeting that their medium-term outlook toward economic recovery had improved due to the $900 billion stimulus package passed by Donald Trump in December, the potential for additional aid, and the "prospect of an effective vaccine program," according to meeting minutes published February 17.

Powell passively urged more stimulus throughout 2020 but pulled back on such comments after Trump's $900 billion plan passed. Democrats are now set to approve another plan currently worth $1.9 trillion as early as mid-March. While the Fed chief has avoided directly commenting on Biden's aid proposal, he noted during the Tuesday hearing that additional aid isn't likely to spur an immediate concerning jump in inflation.

Powell wards off taper, inflation talk with 'highly uncertain' path ahead

The recent uptick in bond yields suggests investors are also betting on a "robust and ultimately complete recovery," Powell told senators. Treasury yields gained over the past few sessions as investors positioned for economic growth and the stronger inflation set to come with it. The move signals investors are pulling forward their expectations of when the Fed will lift interest rates for the first time since March 2020.

The change in market expectations has prompted some discussion around when the central bank will taper its asset purchases. The Fed continues to buy $120 billion of assets each month, split between $80 billion in Treasurys and $40 billion in mortgage-backed securities.

Pulling back from the purchase schedule risks jolting financial markets with a so-called taper tantrum, named for when the Fed "tapers" its bond purchases. A surprise reversal of the Fed's support could spark a sell-off in Treasurys and hinder bond-market functioning.

Powell reiterated Tuesday that the Fed will clearly communicate the assessment of progress toward its inflation and employment goals before taking such action. For now, "substantial further progress" toward above-2% inflation and maximum employment is necessary to warrant a policy shift, he said.

The path forward is "highly uncertain," and the recovery "remains uneven and far from complete," Powell added. While the manufacturing and housing sectors fared well in recent months, spending in some service industries remains low and the labor market's recovery has stagnated.

Fiscal stimulus has helped pad against some of the pandemic's fallout, but the path of the virus is the single biggest factor in bringing about a swift recovery, Powell said.

"While we should not underestimate the challenges we currently face, developments point to an improved outlook for later this year," the Fed chair said. "In the meantime, we should continue to follow the advice of health experts to observe social-distancing measures and wear masks." 

Read the original article on Business Insider

Fed’s Powell says decades-long trend of weak inflation likely won’t change from new stimulus – at least not immediately

jerome powell fed mask
Jerome Powell.
  • Reopening and new stimulus will likely lift inflation later in 2021, Fed Chair Jerome Powell said.
  • Still, the uptick will likely be small and only temporary, he added in a Tuesday Senate hearing.
  • Powell said he expects the tendency for inflation to come in below the Fed's target to linger.
  • Visit the Business section of Insider for more stories.

Additional fiscal stimulus is expected to lift inflation, but the quarter-century trend of weak price growth will likely remain intact, Federal Reserve Chair Jerome Powell said Tuesday.

With Democrats plowing forward with efforts to pass a $1.9 trillion stimulus plan, the focus has shifted from the package's elements to its effect on inflation. Where Democrats argue the measure is necessary to fill the hole in the US economy, Republicans have warned the bill will overfill the hole and kickstart a worrying rise in inflation.

Several factors stand to accelerate price growth in the near term, Powell said while testifying to the Senate Banking Committee. Low data points from the start of the pandemic will soon be excluded from inflation measures' annualized readings. That omission will make inflation seem to tick higher, but near-term price growth won't have changed as much.

Economic reopening and new stimulus could also contribute to stronger inflation in the second half of 2020, but he said he doesn't think "those effects should either be large or persistent."

Inflation has consistently landed below the Fed's 2% target for much of the past three decades. While runaway inflation can spark a new economic crisis, too-little inflation indicates an economy is operating below its full potential.

The central bank adjusted its inflation target in August to allow for brief periods of above-2% price growth, aiming to counterbalance years of weakness.

Inflation will likely be volatile as the economy rebounds and consumer spending bounces back, the chair said. Reopening-fueled price growth is ultimately "a good problem to have," but it won't derail the dynamics that drove decades of weak inflation, he added.

"Inflation dynamics do change over time, but they don't change on a dime," Powell said. "We don't see how a burst of fiscal support or spending, that doesn't last for many years, would actually change those inflation dynamics."

The Fed chair also reassured senators the central bank is well prepared to tackle potential overshoots. Policymakers "have no intention of repeating" the inflation crisis of the 1970s and need to be humble when forecasting price growth, Powell said.

"If it does turn out that unwanted inflation pressures arise and are persistent, then we have the tools to deal with that," he added.

Read the original article on Business Insider

Fed’s Powell says decades-long trend of weak inflation likely won’t change from new stimulus – at least not immediately

jerome powell fed mask
Jerome Powell.
  • Reopening and new stimulus will likely lift inflation later in 2021, Fed Chair Jerome Powell said.
  • Still, the uptick will likely be small and only temporary, he added in a Tuesday Senate hearing.
  • Powell said he expects the tendency for inflation to come in below the Fed's target to linger.
  • Visit the Business section of Insider for more stories.

Additional fiscal stimulus is expected to lift inflation, but the quarter-century trend of weak price growth will likely remain intact, Federal Reserve Chair Jerome Powell said Tuesday.

With Democrats plowing forward with efforts to pass a $1.9 trillion stimulus plan, the focus has shifted from the package's elements to its effect on inflation. Where Democrats argue the measure is necessary to fill the hole in the US economy, Republicans have warned the bill will overfill the hole and kickstart a worrying rise in inflation.

Several factors stand to accelerate price growth in the near term, Powell said while testifying to the Senate Banking Committee. Low data points from the start of the pandemic will soon be excluded from inflation measures' annualized readings. That omission will make inflation seem to tick higher, but near-term price growth won't have changed as much.

Economic reopening and new stimulus could also contribute to stronger inflation in the second half of 2020, but he said he doesn't think "those effects should either be large or persistent."

Inflation has consistently landed below the Fed's 2% target for much of the past three decades. While runaway inflation can spark a new economic crisis, too-little inflation indicates an economy is operating below its full potential.

The central bank adjusted its inflation target in August to allow for brief periods of above-2% price growth, aiming to counterbalance years of weakness.

Inflation will likely be volatile as the economy rebounds and consumer spending bounces back, the chair said. Reopening-fueled price growth is ultimately "a good problem to have," but it won't derail the dynamics that drove decades of weak inflation, he added.

"Inflation dynamics do change over time, but they don't change on a dime," Powell said. "We don't see how a burst of fiscal support or spending, that doesn't last for many years, would actually change those inflation dynamics."

The Fed chair also reassured senators the central bank is well prepared to tackle potential overshoots. Policymakers "have no intention of repeating" the inflation crisis of the 1970s and need to be humble when forecasting price growth, Powell said.

"If it does turn out that unwanted inflation pressures arise and are persistent, then we have the tools to deal with that," he added.

Read the original article on Business Insider

Fed’s Powell says decades-long trend of weak inflation likely won’t change from new stimulus – at least not immediately

jerome powell fed mask
Jerome Powell.
  • Reopening and new stimulus will likely lift inflation later in 2021, Fed Chair Jerome Powell said.
  • Still, the uptick will likely be small and only temporary, he added in a Tuesday Senate hearing.
  • Powell said he expects the tendency for inflation to come in below the Fed's target to linger.
  • Visit the Business section of Insider for more stories.

Additional fiscal stimulus is expected to lift inflation, but the quarter-century trend of weak price growth will likely remain intact, Federal Reserve Chair Jerome Powell said Tuesday.

With Democrats plowing forward with efforts to pass a $1.9 trillion stimulus plan, the focus has shifted from the package's elements to its effect on inflation. Where Democrats argue the measure is necessary to fill the hole in the US economy, Republicans have warned the bill will overfill the hole and kickstart a worrying rise in inflation.

Several factors stand to accelerate price growth in the near term, Powell said while testifying to the Senate Banking Committee. Low data points from the start of the pandemic will soon be excluded from inflation measures' annualized readings. That omission will make inflation seem to tick higher, but near-term price growth won't have changed as much.

Economic reopening and new stimulus could also contribute to stronger inflation in the second half of 2020, but he said he doesn't think "those effects should either be large or persistent."

Inflation has consistently landed below the Fed's 2% target for much of the past three decades. While runaway inflation can spark a new economic crisis, too-little inflation indicates an economy is operating below its full potential.

The central bank adjusted its inflation target in August to allow for brief periods of above-2% price growth, aiming to counterbalance years of weakness.

Inflation will likely be volatile as the economy rebounds and consumer spending bounces back, the chair said. Reopening-fueled price growth is ultimately "a good problem to have," but it won't derail the dynamics that drove decades of weak inflation, he added.

"Inflation dynamics do change over time, but they don't change on a dime," Powell said. "We don't see how a burst of fiscal support or spending, that doesn't last for many years, would actually change those inflation dynamics."

The Fed chair also reassured senators the central bank is well prepared to tackle potential overshoots. Policymakers "have no intention of repeating" the inflation crisis of the 1970s and need to be humble when forecasting price growth, Powell said.

"If it does turn out that unwanted inflation pressures arise and are persistent, then we have the tools to deal with that," he added.

Read the original article on Business Insider

US home prices jumped the most in 7 years in December as the housing-market boom charged into the new year, Case-Shiller says

FILE PHOTO: Homes are seen for sale in the northwest area of Portland, Oregon March 20, 2014.  REUTERS/Steve Dipaola
Homes are seen for sale in the northwest area of Portland, Oregon.
  • The S&P Case-Shiller US home-price index rose to a 10.4% annualized increase in December, up from 9.5%.
  • The reading marks the strongest pace of price growth in seven years, according to a press release.
  • The data suggests the US housing market ended 2020 strong amid low inventory and record-low mortgage rates.
  • Visit the Business section of Insider for more stories.

US home prices surged through the end of 2020 as record-low mortgage rates kept demand at elevated levels, and a general inventory shortage propped up prices.

The S&P CoreLogic Case-Shiller US National Home Price Index posted a 10.4% annualized increase in December, according to a Tuesday press release. The gain follows a 9.4% annualized climb in November and marks the biggest single-month leap in seven years seen by the index, a leading national dataset.

S&P Dow Jones Indices' 10-City Composite index rose to an annualized gain of 9.8% from 8.9%. The 20-City Composite rose to a 10.1% year-over-year jump from November's 9.2% reading.

Phoenix, Seattle, and San Diego saw the biggest home-price increases among the 19 cities surveyed in December.

"These data are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes," Craig Lazzara, managing director and global head of index investment strategy at S&P DJI, said in a statement. "This may indicate a secular shift in housing demand, or may simply represent an acceleration of moves that would have taken place over the next several years anyway."

The housing market was one of the few pockets of the economy to see explosive growth through 2020 as new buyers rushed to scoop up dwindling inventory. The Federal Reserve's decision to drop interest rates to nearly zero in March 2020 dragged on mortgage rates and, along with the onset of the work-from-home era, sparked a homebuying spree. The surging pace of sales for new and existing homes quickly left contractors struggling to keep up.

Though the Tuesday release shows the housing market's rally set to continue into 2021, momentum has wavered in recent weeks. After the 30-year fixed mortgage rate sank below 3% for the first ever in mid-2020 and stayed there for months, it turned higher in mid-January, signaling the buying frenzy could soon cool.

This shift was one of several January and February datapoints indicating investors are growing wary of inflation leaping higher as the economy recovers. Rising inflation would likely correspond with rising mortgage rates and, in turn, slow home-price growth.

Still, the US housing market will likely thrive through 2021 as more forthcoming stimulus bolsters homebuying activity, Fitch analysts led by Suzanne Mistretta said in a February 16 note. The firm said it expects prices and mortgage volume to continue growing in 2021 due to consistently low borrowing costs and lasting supply constraints. Demand is likely to outpace supply until the effects of the coronavirus pandemic fade, the analysts said. In other words, there won't be enough homes to go around for a while yet.

Market health could waver should job losses creep into previously unaffected industries and hit higher-income workers, the team added.

Read the original article on Business Insider

US home prices jumped the most in 7 years in December as the housing-market boom charged into the new year, Case-Shiller says

FILE PHOTO: Homes are seen for sale in the northwest area of Portland, Oregon March 20, 2014.  REUTERS/Steve Dipaola
Homes are seen for sale in the northwest area of Portland, Oregon.
  • The S&P Case-Shiller US home-price index rose to a 10.4% annualized increase in December, up from 9.5%.
  • The reading marks the strongest pace of price growth in seven years, according to a press release.
  • The data suggests the US housing market ended 2020 strong amid low inventory and record-low mortgage rates.
  • Visit the Business section of Insider for more stories.

US home prices surged through the end of 2020 as record-low mortgage rates kept demand at elevated levels, and a general inventory shortage propped up prices.

The S&P CoreLogic Case-Shiller US National Home Price Index posted a 10.4% annualized increase in December, according to a Tuesday press release. The gain follows a 9.4% annualized climb in November and marks the biggest single-month leap in seven years seen by the index, a leading national dataset.

S&P Dow Jones Indices' 10-City Composite index rose to an annualized gain of 9.8% from 8.9%. The 20-City Composite rose to a 10.1% year-over-year jump from November's 9.2% reading.

Phoenix, Seattle, and San Diego saw the biggest home-price increases among the 19 cities surveyed in December.

"These data are consistent with the view that COVID has encouraged potential buyers to move from urban apartments to suburban homes," Craig Lazzara, managing director and global head of index investment strategy at S&P DJI, said in a statement. "This may indicate a secular shift in housing demand, or may simply represent an acceleration of moves that would have taken place over the next several years anyway."

The housing market was one of the few pockets of the economy to see explosive growth through 2020 as new buyers rushed to scoop up dwindling inventory. The Federal Reserve's decision to drop interest rates to nearly zero in March 2020 dragged on mortgage rates and, along with the onset of the work-from-home era, sparked a homebuying spree. The surging pace of sales for new and existing homes quickly left contractors struggling to keep up.

Though the Tuesday release shows the housing market's rally set to continue into 2021, momentum has wavered in recent weeks. After the 30-year fixed mortgage rate sank below 3% for the first ever in mid-2020 and stayed there for months, it turned higher in mid-January, signaling the buying frenzy could soon cool.

This shift was one of several January and February datapoints indicating investors are growing wary of inflation leaping higher as the economy recovers. Rising inflation would likely correspond with rising mortgage rates and, in turn, slow home-price growth.

Still, the US housing market will likely thrive through 2021 as more forthcoming stimulus bolsters homebuying activity, Fitch analysts led by Suzanne Mistretta said in a February 16 note. The firm said it expects prices and mortgage volume to continue growing in 2021 due to consistently low borrowing costs and lasting supply constraints. Demand is likely to outpace supply until the effects of the coronavirus pandemic fade, the analysts said. In other words, there won't be enough homes to go around for a while yet.

Market health could waver should job losses creep into previously unaffected industries and hit higher-income workers, the team added.

Read the original article on Business Insider

JPMorgan still thinks the S&P 500 can rally another 12% this year as US consumer spending explodes for these 7 reasons

NYSE Trader Blur
  • Even as stocks sit near record highs, JPMorgan strategists see seven drivers lifting the market even further.
  • The bank reiterated its S&P 500 target of 4,400 on Friday, implying a 12% leap through the year.
  • Detailed below are the reasons the bank is still bullish, from strong household saving to a healthier labor market.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Stocks leaped to record highs several times throughout the week. JPMorgan sees a handful of reasons even higher levels are in store.

Investors faced a fork in the road earlier this month. New stimulus backed by President Joe Biden and Democrats stands to supercharge the US economic recovery, but more conservative experts raised concerns the package could dangerously lift inflation. Traders largely ignored such fears, but stocks elevated valuations now pose a risk of their own.

Strategists led by Dubravko Lakos-Bujas maintain economic reopening and fresh fiscal support trump all. The team reiterated its S&P 500 target of 4,400 on Friday, implying a roughly 12% jump from current levels. The outlook already hinged on a strong consumer recovery, but several new factors bolstered the bank's call.

Here are the seven reasons JPMorgan sees spending bouncing back and aiding the stock market's rally.

(1) Swift reopening

Tumbling COVID-19 case counts and continued vaccine rollouts place the US economy mere months away from reopening much of its economy, JPMorgan said. The strategists expect the pandemic to "effectively" end over the next 40 to 70 days.

(2) New stimulus

Roughly $30 trillion in stimulus has aided the global economy through the pandemic, and Democrats are charging on with efforts to approve another $1.9 trillion package. That deal can further accelerate the rebound, particularly by prioritizing employment, JPMorgan said.

(3) Pent-up savings

US households are sitting on record cash reserves with savings totaling about $11 trillion, according to the bank. The unwinding of such funds can revive small businesses and spur new hiring.

(4) Ballooning wealth

Markets' health through the pandemic can further boost Americans' wealth. JPMorgan estimates rising values across home equity, pensions, and 401k plans will add up to $48 trillion in total net worth.

(5) Healthy household debt levels

Americans will also be coming out of the pandemic with robust balance sheets. The debt service ratio sits at a four-decade low, and delinquency rates for consumer loans are at historically low levels, JPMorgan said.

(6) Improved job market

A falling unemployment rate, growing average work week, and possibly higher minimum wage will all contribute to a healthier labor market, the strategists said. 

(7) Millennial bump

A record 5 million millennials will reach the inflection point of seeking homeownership, according to the team. Increased spending from this group will shift more savings into the economy.

Read the original article on Business Insider

Low-wage and minority workers were disproportionately hit by the pandemic’s economic pain, Fed study says

Unemployment benefits line
  • The pandemic's damage to the labor market unevenly hit low-wage, Black, and female workers.
  • A Fed study found minorities and those making less than $30,000 saw outsize drops in employment last spring.
  • The employment disparities have closed considerably as the labor market healed.
  • Visit the Business section of Insider for more stories.

Black, low-wage, and female workers bore the brunt of the pandemic's hit to employment last spring, according to a Federal Reserve Bank of New York study published Tuesday.

Low-wage workers and minorities suffered the most acute economic pain at the start of the COVID-19 recession, the Fed researchers said. Indicators including the unemployment rate and proportion of remote workers reveal wide gaps between who kept their jobs in spring 2020 and who, along with more than 20 million Americans, suddenly found themselves without work.

Americans earning less than $30,000 were hit the hardest when the pandemic froze activity last February. Employment among low-wage workers cratered nearly 40%, roughly twice the decline seen among those earning $30,000 to $50,000. Employment among upper-middle wage workers fell just 9%. High-wage workers saw employment hold steady and even climb in the summer, according to the study.

Low-wage unemployment

Read more: Ray Dalio says investors are staring down a period of weak returns as low rates inflate asset bubbles - and warns we're in the 'problem' part of the current cycle

Higher-wage workers were likely insulated from the economic fallout due to their jobs' flexible nature, the researchers said. About 37% of upper-middle-wage workers were able to work remotely through the pandemic. That share climbed to 57% for those earning more than $85,000.

By comparison, only 7% of low-wage workers and 13% of lower-middle-wage Americans were able to telecommute.

Racial disparities also worsened during the pandemic's initial shock. Employment broadly fell 15% from February to April. But where white Americans faced a 15% decline, employment of Black Americans tumbled 16%. Hispanic employment fell 20% over the same period.

Women shouldered a bigger hit than their male counterparts. Female employment dropped 18% from February to April, compared to the 13% decline men saw.

To be sure, inequities seen during the spring decline narrowed significantly as the labor market recouped lost jobs. The employment shortfall stood at 5% for white Americans in December. The Black and Hispanic employment decline was 6%. The shortfall between men and women closed completely.

Still, employment of low-wage workers remains down 14%. That compares to 4% declines for lower-middle-wage and upper-middle-wage workers and a 1% gain for the country's highest earners.

The labor market faces a long road to full recovery, and recent reports suggest the pace of improvement stagnated. The country lost 227,000 payrolls in December and added fewer-than-expected jobs in January, according to the Bureau of Labor Statistics.

"Unfortunately, as the job market began to weaken in late 2020 due to a renewed surge in the virus, there are signs that some of these gaps have begun to widen once more, as many of the most vulnerable workers are yet again being hit hardest," the Fed researchers said.

Read more: The chief investment strategist at a $946 billion asset manager breaks down why he is not worried about an inflation spike - and shares where he is recommending investors park their money now

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US job openings jumped by 74,000 in December as the labor market unexpectedly nosedived

Hiring
A hiring sign is posted i front of a Target store on February 05, 2021 in San Rafael, California.
  • US job openings gained by 74,000 to 6.6 million in December, according to Tuesday JOLTS data.
  • The reading handily exceeds economists' consensus estimate of 6.4 million openings.
  • The hiring rate dropped to 3.9% from 4.2%, the same level seen just before the pandemic.
  • Visit the Business section of Insider for more stories.

Job openings in the US unexpectedly increased in December as US payrolls contracted for the first time since the start of the pandemic.

Openings grew by 74,000 to roughly 6.6 million through the last month 0f 2020, according to Job Openings and Labor Turnover Survey, or JOLTS, data published Tuesday. The climb handily exceeded the 6.4 million openings projected by economists surveyed by Bloomberg.

The state and local governments and the arts and entertainment industries shed the most openings, while the professional and business services sector saw the biggest increase.

Read more: A wealth management research chief shares 6 stock-market sectors to buy as the country reopens and the economy experiences its 'best single year of GDP growth since 2000'

The US hiring rate fell to 3.9% from 4.2%. The pace sits just above levels seen before the pandemic, yet with nearly 10 million Americans still jobless, the reading signals a long period ahead before the US economy fully heals.

Separations, which include quits and layoffs, dropped by 63,000 to 5.5 million. The quits rate rose to 2.3% from 2.2%. The total number of quits climbed by 106,000 to 3.3 million, though the increase was offset by a drop in layoffs and discharges of 243,000.  

About 1.6 Americans competed for every job in December, the same ratio as was seen in November.

The JOLTS data further details the labor market's decline two months ago. US nonfarm payrolls posted an unexpected decline in December that was revised even lower last week. The slide snapped a seven-month streak of additions and marked a major slowdown in the economic recovery.

The Tuesday release also comes days after the Bureau of Labor Statistics' January payrolls report. The country gained 49,000 jobs last month, less than half the 105,000 additions projected by economists. The unemployment rate fell to 6.3% from 6.7%, though the bulk of that improvement came from a decline in the labor force participation rate.

The weaker-than-expected data strengthens the Biden administration's argument for more fiscal stimulus. Payroll growth has been either stagnant or negative for three months. Vaccine distribution and falling COVID-19 cases should help the economy, but economists argue it will take much more to fill the virus-induced hole in the labor market.

Read more: Credit Suisse says to buy these 16 'highest-conviction' stock picks that are set to outperform despite the market's contrarian view

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US stocks pull back from record highs as Wall Street’s rally cools

traders screen brazilian flag
Traders work at the New York Stock Exchange in New York, the United States, March 12, 2020.
  • US equities fell from record highs on Tuesday as investors weighed elevated valuations against stimulus hopes.
  • Stocks are poised to snap a six-day streak of gains that pulled major indexes to record highs on Monday.
  • Bitcoin surged above $48,000 for the first time as momentum from Tesla's $1.5 billion purchase charged on.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US stocks slipped on Tuesday as investors weighed recovery optimism against the market's climb to new highs.

The S&P 500 is poised to snap a six-day streak of gains that placed stocks at all-time highs on Monday. Bullish sentiments have been boosted by the Biden administration's plans to push a large-scale stimulus package through Congress. Though President Joe Biden indicated throughout his campaign that he aims to work in a bipartisan fashion, his administration has warmed up to passing fiscal relief through reconciliation and without Republican support.

Hopes for fresh stimulus and the encouraging pace of COVID-19 vaccinations now square off with elevated valuations. Stocks have already charged to multiple record highs in February, placing more pressure on market participants to secure profits. Expectations for stronger inflation could also weigh on the growth stocks that lifted the market throughout 2020.

Here's where US indexes stood shortly after the 9:30 a.m. ET open on Tuesday:

Read more: A wealth management research chief shares 6 stock-market sectors to buy as the country reopens and the economy experiences its 'best single year of GDP growth since 2000'

Data tracking the US's recovery from the pandemic has also dragged on some optimism. Daily case counts have fallen to their lowest levels since the fall, signaling the dire winter wave is ending. Yet indicators tracking economic activity have yet to trend higher and still show the country mired in a downturn. The National Federation of Independent Businesses' survey of business-owner optimism fell 0.9 points last month to 95, according to a Tuesday release. The gauge has now reversed nearly three-quarters of its recovery.

Earnings season continues after the close with Twitter and Cisco slated to report quarterly figures. Goodyear gained in early trading after the tire manufacturer reported a quarterly profit and better-than-expected sales.

Glu Mobile surged after Electronic Arts agreed to a $2.4 billion acquisition. The deal bolsters EA's offerings in the mobile-gaming segment with titles including Design Home and Covet Fashion.

Read more: Short-seller Carson Block says the day-trading revolution that hit GameStop and other stocks is changing the playing field for investors like him. Here's how his firm is reinventing itself - and what he's betting against today.

Tilray gained after announcing it inked a deal with Grow Pharma to distribute medical cannabis products in the UK. Pot stocks have thrived in 2021 amid hopes the US will federally decriminalize marijuana and rapidly expand the burgeoning market.

Bitcoin leaped even higher as momentum from Tesla's $1.5 billion purchase continued into its second day. The largest cryptocurrency rose above $48,000 for the first time before relinquishing some gains and stabilizing just above $46,000.

Spot gold rose roughly 1%, to $1,848.60 per ounce, at intraday highs. The US dollar weakened against a basket of Group-of-20 currency peers and Treasury yields wavered.

Oil from its highest prices in more than a year as the commodity's recovery rally sputtered out. West Texas Intermediate crude slid as much as 0.72%, to $57.55 per barrel. Brent crude, oil's international benchmark, fell 0.41%, to $60.31 per barrel, at intraday lows.

Read more: Tesla just invested $1.5 billion in bitcoin. Here are the bull and bear cases for the crypto, according to legendary macro trader Mike Novogratz and Goldman's wealth management CIO.

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