Stocks fall as Trump quits talks on stimulus

Stocks dropped on Wall Street Tuesday after President DonaldTrumpordereda stop to negotiationswith Democrats on a coronavirus economic stimulus bill until after the election.

The S&P 500 index slid 1.4% after having been up 0.7% prior to the president’s announcement, which hemade on twitter about an hour before the close of trading. The late-afternoon pullback erased most of the benchmark index’s gains from a market rally a day earlier.

In a series of tweets, Trump said: “I have instructedmy representatives to stop negotiating until after theelectionwhen, immediately after Iwin, wewill pass a major stimulus bill that focuses on hardworking Americans and small business.” He also accused Speaker Nancy Pelosi of not negotiating in good faith.

The comments from the president came just hours after Federal Reserve Chair Jerome Powell urged Congress to come through with more aid, saying that too little support “would lead to a weak recovery, creating unnecessary hardship for households and businesses.”

Optimism that Democrats and Republicans would reach a deal on more stimulus ahead of the Nov. 3 elections had helped lift the stock market recently. Now, investors face the prospect that more aidmay not come until next year, after the new Congress is seated, said Willie Delwiche, investment strategist at Baird.

“This isn’t just pushing it off until after the election, this realistically is pushing it off until spring,” Delwiche said. “I don’t think this is just a one-day financial markets reaction. This really goes to the health of the recovery.”

Stocks had been drifting between small gains and losses for much of the day before gaining momentum into the late afternoon, then Trump’s tweets knocked the market into reverse gear.