Stocks fell on Wednesday, giving back an earlier gain, after comments from Treasury Secretary Steven Mnuchin dampened expectations of a deal being reached on new coronavirus aid.
The Dow Jones Industrial Average was down 200 points, or 0.7%. The S&P 500 traded 0.8% lower and the Nasdaq Composite slid 1.2%.
Mnuchin said around midday that getting a deal done before the election would be difficult, adding that both sides were still far apart on certain issues. He also noted, however, that Democrats and Republicans are making progress in some areas.
His comments came after the White House recently proposed $1.8 trillion for an aid package, which House Speaker Nancy Pelosi said “falls significantly short” of what is needed. On Tuesday, Senate Majority Leader Mitch McConnell said that the Senate will vote on a limited stimulus bill later this month, which will be “targeted relief for American workers, including new funding” for Paycheck Protection Program small business loans.
Shares of Amazon slid more than 2% to lead Big Tech lower. Facebook, Netflix, Alphabet and Microsoft were all down about 1%.
The major averages were higher earlier in the day as traders pored through another batch of corporate earnings.
Earnings ‘so far so good’
Goldman Sachs reported quarterly earnings that were much better than expected. The company’s results were driven in large part by strong bond-trading revenue. However, Goldman shares were down slightly. UnitedHealth reported better-than-expected earnings and revenue for the previous quarter, but the stock fell more than 2%.
Bank of America’s earnings topped analyst expectations but the bank’s revenue missed the mark, sending the stock down 2%. Wells Fargo shares dipped more than 4% as the bank’s third-quarter earnings missed expectations. The bank said its bottom line was impacted by the current low interest rate environment.
“On the earnings overall, so far so good,” said Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management. “You’re going to see a broadening of earnings growth from where it was, concentrated in a few names, into more sectors and companies.”
Stocks fell on Tuesday, snapping a four-day winning streak. The decline came amid a number of headwinds. Eli Lilly said Tuesday afternoon that it would pause its trial of a coronavirus antibody treatment, news that followed Johnson & Johnson’s earlier announcement that it halted its vaccine trial after an “adverse event” was reported. Additionally, hopes for near-term stimulus have faded as Democrats and Republicans remain at odds.
Despite Tuesday’s dip, stocks are higher for October, with the Dow up more than 3% while the S&P 500 and Nasdaq have gained more than 4% and 6%, respectively.
“Markets are now hoping for (and trading on) a smooth election, a big stimulus, the end of the pandemic, and the economy being back to 2019 normal early next year,” said Brad McMillan, chief investment officer at $200 billion Commonwealth Financial Network.
However, he noted that the market’s optimism might make it vulnerable to bad news, especially as Covid-19 cases spike in some areas. “While the economy continues to recover, job growth has slowed substantially even as layoffs remain very high—and we are still only halfway back to pre-pandemic employment levels,” he added.
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