Wall Street slides lower as Mnuchin says stimulus difficult before election


US House of Representatives Speaker Nancy Pelosi and Mnuchin had a productive discussion about relief proposals, but the administration’s lack of a national strategic testing plan remained a “major area of disagreement”, a Pelosi spokesman said. They will speak again on Thursday, he added.

“The market is a little worried about not having that extra support for the next couple of months into the holidays,” said Thomas Hayes, chairman at Great Hill Capital in New York.

“This was viewed as a bridge to a full therapeutic or a vaccine (but) everything is getting delayed and without the stimulus, there’s not that short-term bridge that we needed to get to the vaccine, to get us to the finish line.”

Fading hopes of a deal on federal aid, as well as a halt in trials of a COVID-19 vaccine and a treatment have pulled the three main stock indexes back from one-month highs, but investors have held out for stimulus after the November 3 presidential election.

Goldman Sachs edged up as strength in its trading business helped quarterly profit surge 94 per cent, but Bank of America and Wells Fargo shed 4 per cent and 5.4 per cent, respectively, after a disappointing showing.

The S&P 500 banks index dropped 1.4 per cent as the third-quarter earnings season took off amid improving expectations over the extent of the drop in overall profits for S&P 500 firms.

Analysts now expect earnings to fall 18.9 per cent from a year earlier, according to Refinitiv IBES data, versus a 25 per cent drop forecast on July 1.

Markets have also begun to digest the prospect of a Democratic victory, strategists and fund managers said.

While many investors view Democratic candidate Joe Biden 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.

Energy stocks rose the most among major S&P sectors on the back of a rise in oil prices.

UnitedHealth Group dropped 2.8 per cent despite raising its profit forecast as the US insurer said it was difficult to predict the fallout of the COVID-19 pandemic on earnings.

Declining issues outnumbered advancers 1.18-to-1 on the NYSE and 1.60-to-1 on the Nasdaq.

The S&P index recorded 22 new 52-week highs and no new low, while the Nasdaq recorded 100 new highs and nine new lows.

Reuters