US Stocks Tumble as Hope Fades for Pre-Election Stimulus Deal
The major U.S. stock indexes finished lower on Wednesday, pressured by steep losses in Amazon and Microsoft, as investors threw in the towel on hopes that a U.S. fiscal stimulus package would be approved before the November 3 presidential election.
In the cash market on Wednesday, the benchmark S&P 500 Index settled at 3488.67, down 23.26 or -0.68%. The blue chip Dow Jones Industrial Average finished at 28514.00, down 165.81 or -0.59% and the tech-driven NASDAQ Composite closed at 11768.73, down 95.17 or -0.85%.
Mnuchin Dims Stimulus Hopes
Downbeat comments from Treasury Secretary Steven Mnuchin that a deal would not likely be made before the vote added to fragile sentiment following a mixed bag of quarterly earnings reports from major Wall Street lenders, Reuters reported.
“At this point getting something done before the election and executing on that would be difficult, just given where we are and the level of detail, but we’re going to try to continue to work through these issues,” Mnuchin said at conference sponsored by the Milken Institute.
Stocks and Sectors
Amazon dropped 2.3% and Microsoft lost 0.9%, both weighing more than any other stocks on the S&P 500. Microsoft was also a drag on the NASDAQ Composite and the Dow Jones Industrial Average.
Bank of America fell 5.3% and Wells Fargo tumbled 6% after reporting disappointing quarterly results. The news helped drive the S&P 500 bank index lower by 2.4%.
UnitedHealth Group, another Dow component, dropped 2.9%, despite raising its profit forecast, as the U.S. insurer said it was difficult to predict the fallout of the pandemic on earnings.
Early Earnings Results Show Signs of Improvement
Third-quarter earnings season is getting underway, with signs of overall improvement in expectations of how badly U.S. companies have been hurt by the pandemic. Analysts expect earnings to fall 19% from a year earlier, according to Refinitiv IBES data, versus a 25% drop estimate on July 1, Reuters reported.
Markets Leaning Toward Biden Victory
The recent rally reflects growing optimism for a Joe Biden victory on Election Day. While many investors view the Democratic candidate as more likely to raise taxes, they are increasingly pointing to potential benefits of a Biden presidency, such as greater infrastructure spending and less global trade uncertainty.
The Internals
Declining issues outnumbered advancing ones on the NYSE by a 1.51-to-1 ratio; on NASDAQ, a 1.95-to-1 ration favored decliners, according to Reuters.
The S&P 500 posted 23 new 52-week highs and no new lows; the NASDAQ Composite recorded 109 new highs and 14 new lows.
Volume on U.S. exchanges was 8.2 billion shares, compared with the 9.6 billion average over the last 20 trading days.
For a look at all of today’s economic events, check out our economic calendar.
This article was originally posted on FX Empire
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