HYBRIDS: Eesti Energia (ESTONE: Perps B): S&P Cut from B+

• Stocks have recovered from modest early session losses Tuesday, Materials and Energy sectors outperforming. Currently, the DJIA trades up 29.97 points (0.07%) at 44498.54, S&P E-Minis down 1.75 points (-0.03%) at 6086.75, the Nasdaq down 24.3 points (-0.1%) at 19688.63.
• Chemical manufacturers buoyed the Materials sectors in the first half: Ecolab Inc +7.49% after beating earnings estimates, as did DuPont de Nemours +6.86% amid robust end user demand. Oil and gas shares continued to gain with ongoing support in crude (WTI +.70 at 73.02): Phillips66 +4.41%, APA Corp +2.52%, Halliburton +1.85%.
• On the flipside, Consumer Discretionary and Communication Services sectors underperformed, a mix of auto and travel related stocks weiged on the former: Marriott Int -4.30%, Tesla -3.13%, Expedia -2.54% while Wynn Resorts declined 2.2%. Interactive media and entertainment shares weighed on the Communication Services sector: Netflix -1.60%, Take Two Interactive -1.18 while Live Nation declined 1.17%.
• Reminder, Tuesday afternoon earnings include: Upstart Holdings, Brighthouse Financial, Welltower, Confluent, DoorDash, Eversource Energy, Lyft, Zillow Group, Gilead Sciences and Edwards Lifesciences Corp.

• US TSY 42D AUCTION: NON-COMP BIDS $268 MLN FROM $85.000 BLN TOTAL

Much of the early portion of Fed Chair Powell's  Q&A with the Senate Banking Committee is devoted to financial system regulation; from a monetary policy perspective a few exchanges stand out:

• On tariffs: Powell asked about whether tariffs on China, Canada and Mexico are a wise policy: "I think the standard case for free trade and all that logically still makes sense. It didn't work that well when we have one very large country that doesn't really play by the rules. And in any case, it's not the Fed's job to make or comment on tariff policy."
• On QT: Powell repeats his previous description of reserves as "abundant" and the decision-making process to end-QT (the process still has "a ways to go"): "The most recent data and the feel of the markets is definitely that reserves are still abundant. They're about the level they were at when runoff started, because the runoff has really happened out of the overnight [reverse] repo facility... we're going to be looking at conditions in reserve markets and trying to stop a little bit above what we consider ample and we think we're meaningfully above that. Now we can't put a number on it, because you can't directly know the demand for reserves, other than by observing behavior in the market and then putting a little bit of a buffer on it. So I can't give you an exact number, but for now, it's ongoing, and we have a ways to go."
• On Presidential interference with Fed leadership: Asked "what would you do if the President tried to remove a member of the Federal Reserve Board?" Powell responds, "well, it's pretty clearly not allowed under the law."