Stocks rose considerably by midday Tuesday as Federal Reserve Chairman Jerome Powell began his testimony to Congress.
In the morning, the S&P 500 was largely flat, upheld by strength in semiconductor stocks. The 10-Year Treasury yield was down to 0.63%, so the market was looking mostly risk-off. By midday, the S&P 500 was up 1% and the tech-heavy Nasdaq was up 1.4%. Cyclical stocks joined the party.
Powell, in his address on the Fed website pre-testimony, focused on economic uncertainty and the possibility of a slower recovery than what the stock market is pricing for. He also hinted at the need for more fiscal stimulus, as additional monetary stimulus and low interest rates may soon have a fading marginal impact on the economy and stock market.
Yes, tech was leading as Micron’s (MU) - Get Micron Technology, Inc. (MU) Report earnings beat showed strength in cloud spend and therefore data chip sales. Micron rose more than 5% and semiconductor investors took their cues, sending the iShares PHLX semiconductor ETF (SOXX) - Get iShares PHLX Semiconductor ETF Report up more than 2.5%.
But cyclical stocks began rising as well, albeit mostly underperforming.
Oil, banking and consumer discretionary stocks rose between 0.45% and 1.8%. Value stocks have been beaten up of late and one trader TheStreet recently spoke with says that portfolio managers are rebalancing a bit more towards value for the second half of year, potentially in an attempt to show clients diversification away from growth tech.