Stocks fall on Wall Street as hopes fade for stimulus deal
The Associated Press
Stocks gave up early gains and closed lower Wednesday, adding to Wall Street’s losses from a day earlier.
The S&P 500 fell 0.7% after spending the morning swaying between small gains and losses. Companies that rely on consumer spending, banks and technology and communication stocks bore the brunt of the selling. Trading in stock markets overseas was subdued as coronavirus counts climb around the world, raising the risk of more government restrictions on businesses. Treasury yields fell, while prices for crude oil and gold rose.
The decline came as talks between Democrats and Republicans in Washington over another economic stimulus package continued to drag on, dimming investors’ hopes for a deal that can deliver more aid for the U.S. economy in the near term.
Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi spoke by phone again Wednesday morning but didn’t reach an agreement, Pelosi aide Drew Hammill tweeted, adding that the two plan to speak again Thursday. Mnuchin said at a conference sponsored by the Milken Institute that it would be “difficult” to get a deal done before the presidential election next month.
“The time for being able to pull this off is now coming to a close,” said Rod von Lipsey, managing director at UBS Private Wealth Management. “The market has been listless because it understands that it’s probably not going to happen.”
Investors are still anticipating some kind of an aid package eventually passing, he said, but it will now likely wait until after the election.
The S&P 500 fell 23.26 points to 3,488.67. The benchmark index broke a strong four-day winning streak on Monday. The Dow Jones Industrial Average lost 165.81 points, or 0.6%, to 28,514. The pullback knocked the Dow back into the red for the year. The Nasdaq composite slid 95.17 points, or 0.8%, to 11,768.73. At one point it had been up 0.6%.
Small company stocks, the biggest gainers so far this month, also fell. The Russell 2000 small-caps index gave up 15.20 points, or 0.9%, to 1,621.65.
Despite the market’s two-day slide, stocks have been mostly pushing higher this month. About halfway through October, the major stock indexes have recouped most of their losses from last month’s market swoon.
Even so, this week’s kick-off to earnings reporting season is painting a mixed picture for investors.
Big banks are traditionally the first companies to tell investors how much profit they made in the prior quarter, and Bank of America and Wells Fargo fell following the release of their reports, posting the biggest losses in the S&P 500. Bank of America sank 5.3% after its revenue fell short of analysts’ forecast, while Wells Fargo dropped 6% after its earnings were lower than Wall Street expected.
Goldman Sachs rose 0.2% after reporting stronger profit than analysts expected. U.S. Bancorp was fell 0.4% after giving up an early gain following its earnings report, which was also stronger than analysts expected.
Across the S&P 500, analysts are expecting companies to report another drop in profits for the summer from year-ago levels. But they’re forecasting the decline to moderate from the nearly 32% plunge from the spring as the economy has shown signs of improvement.
The sharpest profit drops for the quarter are expected to come from energy stocks, but the sector rose Wednesday to some of the biggest gains among the 11 that make up the S&P 500 index. A 2.1% rise for crude oil prices helped. So did a report that ConocoPhillips is in talks to buy Concho Resources. Concho jumped 10.2%, the biggest gainer in the S&P 500, following the report from Bloomberg News.