By Alexander Osipovich and Mischa Frankl-Duval
The Dow Jones Industrial Average fell more than 400 points
Monday as investors' hopes for a fresh stimulus package before the
election dwindled.
Major U.S. stock indexes opened higher 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 dropped 410.89 points, or 1.4%, to close at 28195.42.
The blue-chips index had been up more than 105 points just after
the opening bell.
The S&P 500 slid 56.89, or 1.6%, to 3426.92. The
technology-heavy Nasdaq Composite declined 192.67, or 1.7%, to
11478.88 in its fifth consecutive losing session.
Investors have been closely monitoring the progress of talks
between lawmakers and the White House over a stimulus deal. Further
relief to households or businesses battered by the coronavirus
pandemic could bolster an economic recovery as the effect of
previous stimulus measures wears off.
House Speaker Nancy Pelosi has told the White House it had until
Tuesday to reach a deal with Democrats. If the deadline passes
without a deal, continuing talks would be increasingly unlikely to
produce sweeping relief legislation worth trillions of dollars
within the next two weeks, her aide suggested.
"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 damp market
returns in the long run due to higher taxes.
With Covid-19 continuing to affect 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 4.5% below the record 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 also are keeping a close eye on corporate earnings.
Netflix, Tesla and AT&T are among the major companies reporting
financial results in the coming days.
"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 multiasset 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 fell 8 cents, or 0.7%, to $12.17 after the
oil-field-services company reported a quarterly loss of $17
million. That was down from a profit of $295 million in the same
period last year, but it beat Wall Street analysts' forecasts.
Shares of AMC Entertainment jumped 50 cents, or 16%, to $3.54
after the movie-theater operator said it would resume operations at
some locations in New York state beginning Friday.
ConocoPhillips shares slid $1.07, or 3.2%, to $32.70 after the
oil giant agreed to acquire Texas shale driller Concho Resources in
a $9.7 billion all-stock deal. Concho shares fell $1.34, or 2.8%,
to $47.26.
American Equity Investment Life Holding shares tumbled $4.81, or
15%, to $27.49. 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 precoronavirus 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 0.2%. 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 0.760%, 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 19:55 ET (23:55 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.