Stocks slump as hopes for virus relief package fade
Stocks gave up some of their recent gains Monday as hopes faded on Wall Street that Washington will come through with aid for the economy before Election Day.
The S&P 500 dropped 1.6%, its worst day in more than three weeks. The benchmark index had been up 0.5% in the early going after a report that China’s economy grew at a nearly 5% annual rate in the third quarter quarter. The market’s slide was broad, though technology, health care and communication stocks bore the brunt of the selling. Treasury yields were mixed.
The early gains evaporated by midafternoon ahead of another round of talks between Democratic and Republican leadership over a long-sought economic stimulus bill. Wall Street is expecting that lawmakers will agree on new stimulus measures for the economy, but the odds of that happening before the Nov. 3 election have dimmed.
“We’re in a period here in the the next couple of weeks where the market goes sideways through the election,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management.
The S&P 500 fell 56.89 points to 3,426.92. The Dow Jones Industrial Average of big blue chips dropped 410.89 points, or 1.4%, to 28,195.42. The Nasdaq composite extended its losing streak to a fifth day, losing 192.67 points, or 1.65%, to 11,478.88.
Small-company stocks also fell. The Russell 2000 gave up 20.18 points, or 1.2%, to 1,613.63. The index has gained 7% so far this month, outpacing the 1.9% gain for the broader S&P 500.
Stocks have been mostly pushing higher this month after giving back some of their big gains this year in a sudden September swoon. The benchmark S&P 500 has notched a gain in each of the past three weeks. Even so, trading often has been choppy from one day to the next, reflecting uncertainty over the timing of more stimulus for the economy, something investors have been hoping for since July, when a supplemental $600-aweek unemployment benefit package ran out.
Senate Majority Leader Mitch McConnell is expected to bring a his version of a stimulus bill to the floor of the Senate for a vote on Wednesday. However that bill is likely to get zero traction with the Democratic-controlled House of Representatives. So far, McConnell, Pelosi and President Donald Trump have not been on the same page.
Pelosi and Treasury Secretary Steven Mnuchin spoke Monday and are due to resume talks today, Pelosi spokesman Drew Hammill tweeted after the end of regular trading.
Investors were also looking ahead to another busy week of corporate earnings reports. Procter & Gamble, Netflix and American Express are a few of the companies that will reveal the extent of the virus pandemic’s impact during the most recent quarter.
AMC Entertainment was among the few gainers Monday. Its shares jumped 16.4% after the movie theater chain said it plans to resume operations in theaters in New York state later this week.
Several airlines also rose after the Transport Security Administration said the number of passengers screened in a single day for flights in the U.S. topped 1 million on Sunday for the first time since the coronavirus cases began to spike in March. That compares with 2.6 million passengers screened by TSA on the same day last year, or roughly 60% fewer. United Airlines rose 3.9% and Southwest Airlines edged up 0.4%.
ConocoPhillips fell 3.17% after the oil giant announced it would buy Concho Resources for $9.7 billion. The deal is the largest in the oil industry since crude prices plummeted this year due to the coronavirus pandemic. Concho lost 2.74%.
The yield on the 10-year Treasury note rose to 0.77% from 0.76% late Friday.