The S&P 500 gained on Tuesday as investors weighed tensions between the U.S. and China with House Speaker Nancy Pelosi’s Taiwan visit and reacted to comments from the Chicago Fed president signaling the central bank could back off large rate hikes soon.
The S&P 500 rose 0.47% after being down nearly 1% earlier in the session. The benchmark climbed off the lows as Pelosi’s plane landed safely in Taiwan Tuesday morning. The Nasdaq Composite gained 1.01%, boosted by a huge gain in Uber following earnings.
The Dow Jones Industrial Average was the outlier, slipping 42.08 points, or 0.13%, weighed down by Caterpillar, which shed more than 3% after reporting disappointing quarterly earnings.
Comments from Chicago Federal Reserve President Charles Evans also gave stocks a lift in the afternoon. Evans said that he hopes the central bank can hike its benchmark interest rate by half a percentage point in September and then continue with quarter-point hikes until the start of the second quarter in 2023.
Pelosi is expected to spend the night in Taiwan, Reuters reported. Leading up to the trip, Chinese officials threatened to act if Pelosi moved forward with the visit. Pelosi is the first House Speaker since Newt Gingrich in 1997 to visit Taiwan.
“I do think the trip will not lead to any real economic disruption, but of course the rhetoric and the headlines start to intensify and it’s something we need to watch going forward,” said Mona Mahajan, Edward Jones senior investment strategist, on CNBC’s “Squawk Box” Tuesday. “Geopolitical tension has been a theme we’ve really been seeing all year that has been weighing on markets.”
Traders are also looking ahead to another raft of earnings from companies such as Starbucks, PayPal and Advanced Micro Devices on Tuesday after the bell. On the economic data front, investors this week are awaiting the July nonfarm payrolls report slated for release Friday for further clues into the state of the economy and the job market.
