By Alexander Osipovich and Mischa Frankl-Duval
The Dow Jones Industrial Average fell more than 350 points as
investors' hopes for a fresh stimulus package before the election
dwindled.
Major U.S. stock indexes opened higher on Monday but retreated
over the day as a Democratic-imposed deadline for a deal approached
with no clear signs of progress. It looks increasingly unlikely
that a big U.S. government spending package will be approved before
Nov. 3, analysts said.
The Dow was down 363 points, or 1.3%, in afternoon trading. The
blue-chips index had been up more than 105 points just after the
opening bell.
The S&P 500 slid 1.4%, while the technology-heavy Nasdaq
Composite was down 1.2%.
Investors have been closely monitoring the on-again, off-again
progress of talks between lawmakers and the White House. Further
relief to households or businesses battered by the coronavirus
pandemic could bolster the economic recovery as the effect of
previous stimulus measures wears off.
Over the weekend, House Speaker Nancy Pelosi told the White
House it had until Tuesday to reach a deal with Democrats. If the
deadline passes without a deal, ongoing talks would be increasingly
unlikely to produce sweeping relief legislation worth trillions of
dollars within the next two weeks, her aide suggested. Mrs. Pelosi
and Treasury Secretary Steven Mnuchin spoke Saturday night, but a
number of differences remain.
"President Trump would love to have a stimulus package before
the election," said Michael Mullaney, director of global markets
research at Boston Partners. "But there's no political upside for
Pelosi to sign anything before the election."
Markets are betting that a "blue wave" election--in which
Democrats win control of both the White House and Congress--will
eventually result in a large stimulus package, Mr. Mullaney said,
though he added that such an election result could ultimately
dampen market returns due to higher taxes.
With Covid-19 continuing to impact the economy, further fiscal
stimulus will be necessary, said Robert McAdie, chief cross-asset
strategist at BNP Paribas.
"Without renewed fiscal stimulus you'll see a new wave of
unemployment, and a new wave of delinquencies and defaults, and
that will certainly weigh on growth," he said.
An advance in major U.S. stock indexes has stalled in recent
days, leaving the S&P 500 less than 4% below the record high it
reached in early September. Last week, stocks eked out muted gains
as investors reckoned with persistently high Covid-19 cases and
political uncertainty.
Investors are also keeping a close eye on corporate
earnings.
Netflix, Tesla and AT&T are among the major companies
reporting financial results in the coming days. Technology giant
International Business Machines, or IBM, will report on Monday
after the market closes.
"It's going to be all about the guidance, and the guidance has
largely been better than expected, certainly in the U.S.," said
Andrew Cole, head of multi asset in London at Pictet Asset
Management. "Everybody knows earnings this year are going to be
pretty horrid from a year-on-year perspective, so when we start to
think about earnings, it's increasingly 2021 that matters," he
said.
Halliburton shares gained 0.2% after the oil-field-services
company reported a quarterly loss of $17 million, down from a
profit of $295 million in the same period last year, but higher
than Wall Street analysts' forecasts.
Shares of AMC Entertainment jumped 15% after the movie-theater
operator said it would resume operations at some locations in New
York state beginning Friday.
ConocoPhillips shares slid 1.9% on news that the oil giant would
acquire Texas shale driller Concho Resources in a $9.7 billion
all-stock deal. Concho shares were recently down 1.3% in choppy
trading.
American Equity Investment Life Holding shares tumbled 17%. The
company on Sunday rejected a takeover offer by Massachusetts Mutual
Life Insurance and Athene Holding, and said it instead reached a
partnership with Brookfield Asset Management.
Overseas, Chinese officials said that gross domestic product
expanded by 4.9% in the third quarter from a year earlier, putting
China's economy back toward its pre-coronavirus trajectory half a
year after the pandemic gutted its economy.
Investors had a mixed reaction to the data, as the growth figure
fell short of expectations. The Shanghai Composite Index fell 0.7%,
while Hong Kong's Hang Seng Index rose 0.6%.
The pan-continental Stoxx Europe 600 dropped 0.3%. Euronext NV,
which operates exchanges across Europe, said it had resolved a
technical issue that had halted trading in some markets.
The yield on 10-year Treasury notes ticked up to 0.761%, from
0.743% on Friday.
In commodities, U.S. crude-oil futures slipped 0.1%, or 5 cents
per barrel, to settle at $40.83.
--
Chong Koh Ping
contributed to this article.
Write to Alexander Osipovich at alexander.osipovich@dowjones.com
and Mischa Frankl-Duval at Mischa.Frankl-Duval@wsj.com
(END) Dow Jones Newswires
October 19, 2020 15:16 ET (19:16 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.