UPDATE: Stocks stumble as investors see more troubling signs on horizon

The NASDAQ composite index was down 49.72 or .54% to 9,185.10.

The S&P 500 was down 30.97 or 1.05% to 2,922.94.

Losses for banks, health care stocks and elsewhere outweighed solid showings for technology companies and those that rely on consumer spending.

Kohl’s, whose stores are closed, fell after reporting a $541 million loss as its revenue fell more than 40%.

Home furnishing retailer Pier 1 Imports, which filed of Chapter 11 bankruptcy in February, on Tuesday asked a court for approval to shut its doors for good.

But Walmart rose after reporting a surge in sales as people stocked up on crucial supplies as they sheltered in place.

Stocks that moved heavily or traded substantially on Tuesday:

Advance Auto Parts Inc., up $4.71 to $135.82.

The auto parts retailer said its sales have been improving significantly during the second quarter.

Home Depot Inc., down $7.25 to $238.10.

The home-improvement chain reported disappointing first-quarter profit and scrapped its full-year forecasts.

Bond yields fell in a sign that investors’ optimism about the economy was waning again. Oil prices rose.

Poor economic data overseas reinforced the challenges the world faces in recovering from the recession induced by the coronavirus pandemic.

While markets began the week on a strong note amid optimism over a potential vaccine, they steadied on Tuesday after a record jump in jobless claims in Britain and a 76% slide in new car sales across Europe.

A report that the U.S. tech-heavy Nasdaq plans to tighten rules for initial public offerings revived caution over the potential for more friction between the U.S. and China.

Earnings reports from major retailers showed how differently those companies are faring during the coronavirus pandemic.

Stimulus testimony

Treasury Secretary Steven Mnuchin came under tough questioning from senators Tuesday about a small business lending program included in the government's $2 trillion relief package.

Lawmakers from both parties have criticized the Payroll Protection Program, which initially provided $349 billion in forgivable loans to small companies but has been plagued by a host of problems. Many businesses were unable to get loans before the initial funding was exhausted. A second round of loans faced computer processing delays and a number of publicly traded companies ended up receiving money that Mnuchin demanded be paid back to the government.

Both he and Federal Reserve Chair Jerome Powell offered Congress contrasting views Tuesday of what the government's most urgent priority should be.

Striking a theme frequently pushed by President Donald Trump, Mnuchin warned that prolonged business shutdowns would pose long-term threats to the economy, from widespread bankruptcies for small businesses to long-term unemployment for millions of Americans.

“There is risk of permanent damage,” Mnuchin said.

Powell, by contrast, stressed, as he has in recent weeks, that the nation is gripped by an economic shock “without modern precedent” and that Congress must consider providing further financial aid soon to support states, localities, businesses and individuals to prevent an even deeper recession.

“What Congress has done to date has been remarkably timely and forceful,” Powell said. “But we need to step back and ask, ‘Is it enough?"

Their points of emphasis reflect the contours of a debate occurring across the country, among individuals, business people and political leaders, about when and under what circumstances the economy should reopen and what further help the government can or should provide.

Mnuchin and Powell offered their views at an oversight hearing of the Senate Banking Committee at which members of both parties questioned them about when their agencies will distribute more of the emergency aid that Congress provided in late March to struggling small businesses and households.

Powell said that a highly anticipated lending program the Fed is creating for small businesses should be operating by the end of the month. And in a turnaround, Mnuchin said the Treasury is now prepared to absorb some losses in that program, which is funded by Treasury. Doing so could enable the Fed to take on further risk with the program and help more struggling companies.

Biggest mood booster

But in Asia the mood was upbeat after the drug company Moderna said it had promising results from a coronavirus vaccine.

That was “the biggest mood booster for markets, given the fact that the lingering coronavirus implications remain the single biggest issue holding back the market from recovery and a contributor to other risk factors including U.S.-China tensions,” Jingyi Pan of IG said in a commentary.

Massachusetts-based Moderna saw its stock jump 20% in New York trading Monday.

A safe, effective vaccine for the new coronavirus would help reinforce confidence as economies reopen after shutdowns to contain the pandemic. Experts have warned, however, that development of such a vaccine will likely take many months, and possibly years.

Investors also have been encouraged by remarks over the weekend from Federal Reserve Chair Jerome Powell, who expressed optimism that the U.S. economy could begin to recover in the second half of the year. Once the outbreak has been contained, he said, the economy should be able to rebound “substantially.”

Inside Powell’s testimony

In his prepared testimony, Powell said the central bank will disclose the amounts borrowed and the interest rates it levies under its programs to provide credit for large corporations, state and local governments, and medium-sized businesses.

“We are deeply committed to transparency, and recognize that the need for transparency is heightened when we are called upon to use our emergency powers,” his testimony says.

The Fed had already pledged to publish the names of its borrowers from its Main Street Lending program, and some of its other lending efforts. The Main Street program, which has not yet been launched, has already attracted scrutiny from environmental groups, which charge that oil and gas drillers, most already heavily indebted, will use it as a lifeline.

In the 2008 financial crisis, the Fed faced widespread criticism for the opaque nature of the lending programs it launched. It has revived many of those programs to smooth the flow of credit in the current crisis.

Powell said the Fed will also name the companies that benefit from its two facilities that have started to purchase corporate debt, as well as its program to purchase municipal bonds and a facility that will buy securities backed by auto, student, and credit card loans.

The Fed chair also reiterated that central bank will use "our full range of tools to support the economy in this challenging time." In a "60 Minutes" interview Sunday night, Powell said the Fed's ability to support the financial markets and economy are essentially unlimited, helping to spark a stock market rally Monday.

In the "60 Minutes" interview, Powell also repeated his view that Congress and the Fed must be prepared to provide additional financial support to prevent long-term damage to the economy from widespread bankruptcies among small businesses and long-term unemployment. Congress has already approved roughly $3 trillion in rescue aid for individuals and businesses. But states and localities say they are in need of federal money to avoid having to cut jobs and services, and legislation to provide that money remains at an impasse in Congress.

Europe and Asia

France’s CAC 40 fell 0.7% to 4,465, while Germany’s DAX lost 0.4% to 11,014. Britain’s FTSE 100 also edged down 0.6% to 6,021. U.S. shares were set for declines, with Dow futures falling 0.1% and S&P 500 futures down 0.2%.

Japan’s benchmark Nikkei 225 added 1.5% to finish at 20,433.45. Australia's S&P/ASX 200 jumped 1.8% to 5,559.50. South Korea’s Kospi was up 2.3% to 1,980.61. Hong Kong’s Hang Seng gained 1.9% to 24,388.13, while the Shanghai Composite edged up 0.8% to 2,898.58.

Benchmark U.S. crude oil added 91 cents to $32.73 a barrel. It jumped 8.1% to 31.82 a barrel Monday. Brent crude, the international standard, rose 12 cents to $34.93 a barrel.

— Compiled and edited by ArLuther Lee for The Atlanta Journal-Constitution.