U.S. benchmark stock indexes fell Tuesday after President Donald Trump said he would end negotiations on a new fiscal stimulus package, sending jitters into investors who hoped Washington lawmakers would strike a deal soon.
What are major benchmarks doing?
The Dow Jones Industrial Average DJIA, -1.17% gave up a gain of more than 100 points to trade more than 300 points lower on the day after President Donald Trump tweeted that he had ordered his team to halt talks on a stimulus package with congressional Democrats until after the election. The Dow DJIA, -1.09% was down 315 points, or 1.1%, while the S&P 500 SPX, -1.09% was down 1.3% at 3,365.
The Dow on Monday rose 465.83 points or 1.7% to finish at 28,148.64, while the S&P 500 rose 60.19 points, or 1.8%, to close at 3,408.63. The Nasdaq finished at 11,332.49, up 257.47 points, or 2.3%.
What’s driving the market?
Stocks swooned after Trump said in a tweet that he would stop negotiating on a fiscal stimulus bill until after the election and would focus on advancing Amy Coney Barrett’s nomination to the Supreme Court. His comments came after he left Walter Reed Medical Center after a three-night stay.
Fears the economic recovery from the pandemic-induced near-shutdown earlier this year could stall without another round of fiscal support have been on the rise.
Crunchtime is approaching for a fiscal deal, said Tom Plumb, portfolio manager of the Plumb Balanced Fund, in an interview.
A plea Monday by management of Southwest Airlines LUV, -1.55% to union workers to make sacrifices due to the inaction of the federal government was a “shot across the bow,” Plumb said.
As traditionally well-managed companies suffer, the potential for mass layoffs and other hardship come more sharply into focus, he said.
In a speech to the National Association of Business Economics, Powell repeated that the U.S. economy needs more fiscal support even though the recovery from the “natural disaster” of the coronavirus pandemic so far has been strong.
“As Powell said, when you’re in a secular stagnation, low-growth period that reduces the impact monetary policy has. The onus then is on the fiscal space,” said Frank Rybinski, chief macro strategist at Aegon Asset Management, in an interview.
Shares in Cineworld CINE, +10.31% plunged 57% on Monday, after the world’s second-largest movie chain confirmed it will temporarily close its cinemas in the U.K. and the U.S., putting 45,000 jobs at risk.
Read: Trump tweets ‘don’t be afraid of COVID,’ sparking heated Twitter exchanges
In economic data, the U.S. trade deficit climbed almost 6% in August to $67.1 billion, the third widest gap on record, reflecting a continuing struggle by American exporters to recover all the ground lost in the early stages of the coronavirus pandemic. Economists polled by MarketWatch has forecast a $66.7 billion trade gap.
Hiring and job openings in the private sector fell in August in a sign the U.S. labor market was cooling off as an economic recovery lost some of its earlier momentum, a government survey showed.
Philadelphia Fed President Patrick Harker, Atlanta Fed Raphael Bostic and Dallas Fed President Robert Kaplan are also slated to makes speeches Tuesday.
See: Trump’s coronavirus recovery, stimulus hope, election clarity: What’s really driving the market?
Which companies are in focus?
- Southwest Airlines shares LUV, -1.55% were up 2.1% after its call for union concessions.
- Boeing Co. BA, -5.91% shares dropped 3.4% after the aircraft maker forecast an 11% drop in demand for commercial planes in the next decade and, in a separate outlook for the commercial aviation market, said it sees passenger-traffic growth to increase by an average of 4% a year in the next two decades.
- Apple Inc. AAPL, -2.53% announced it would hold an online event on Oct. 13 that’s expected to bring the launch of its new family of iPhones. Shares were down 0.5%.
- Shares of Alexion Pharmaceuticals Inc. ALXN, +0.65% were up 1.7%, after the biopharmaceutical company said it expected to raise its 2020 revenue guidance by more than $200 million, when it reports third-quarter results.
- Shares of Sonos Inc. SONO are off 4% after a Bloomberg report highlighted that Apple Inc. AAPL is no longer selling the company’s speakers in its stores.
- General Electric Co.’s stock GE, -4.21% fell 3% after it received a “Wells notice” from the Securities and Exchange Commission related to accounting practices.
- Clover Health Investments Corp. announced Tuesday a merger with a “blank-check” company that will take the Medicare Advantage insurer public.
What are other markets doing?
The yield on the 10-year Treasury note TMUBMUSD10Y, 0.746% fell 2.2 basis points to 0.739%. Yields and bond prices move in opposite directions.
In global equities, Hong Kong’s Hang Seng Index HSI, +0.89% rose 0.9%, while Japan’s Nikkei 225 NIK, +0.52% gained 0.5%. The pan-European Stoxx 600 Europe SXXP, +0.06% and London’s FTSE 100 UKX, +0.11% each rose 0.1%.
Gold edged higher, with the December contract GOLD, -3.70% falling $11.40, or 0.6% to settle at $1,901.10 an ounce on Comex. Oil futures added to big gains scored on Monday, with the U.S. benchmark CL.1, +2.09% up more than 2%.
The greenback is down 0.1% for the day based on trading in the ICE U.S. Dollar Index. DXY, +0.27%
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