A summer bummer for the Senate — in the form of a shortened August recess to help lawmakers whittle down their legislative to-do list — soothed over some of the political turbulence that prompted a sell-off in US stocks earlier on Tuesday, helping key markets largely reverse their losses by Tuesday’s closing bell.
The Dow Jones Industrial Average ended the day unchanged 21,409, while S&P 500 closed 0.08 per cent lower at 2,425. The S&P 500 was fuelled by gains in energy and tech stocks, while nearly ever other sector dipped into the red by the day’s end. The tech-heavy Nasdaq, meanwhile, closed out the day with a 0.27 per cent gain, to 6,193.
The swing upwards erases most of the sudden losses sparked earlier in the day by Donald Trump Jr’s release of an email exchange in which he enthusiastically welcomed a purported offer of Russian government assistance to undermine his father’s presidential campaign rival, Hillary Clinton, in the midst of the 2016 race.
Citi analysts saw the emails as raising the risk of impeachment proceedings against Mr Trump Jr’s father. But investors’ fear that the White House controversies would stymie Republicans’ business-friendly legislative agenda was allayed somewhat by Senate majority leader Mitch McConnell’s subsequent announcement that the start of the August recess would be pushed back two weeks to allow legislators time to work on passing laws and confirming nominees.
Meanwhile, the political fallout injected some softness into the dollar, with the dollar index falling as much as 0.4 per cent earlier in the day before recouping some of the losses to end the day down 0.28 per cent to 95.75. Yield on the 10-year US Treasury fell 1.8 to 2.355 per cent.