By Anna Hirtenstein and Michael Wursthorn 

U.S. stocks pared their losses Thursday after a senior Republican lawmaker pledged an orderly transition of power following the election this fall, tamping down some recent jitters that had hampered stocks.

Senate Majority Leader Mitch McConnell said on Twitter that the winner of November's presidential election would be inaugurated as planned in January. Stocks immediately began paring losses after the tweet, gaining enough ground to push all three major U.S. indexes into positive territory in recent trading.

The tweet appeared to be a response to President Trump's refusal to commit to a peaceful transition of power in a scenario in which he lost the election. For investors, the comments added another potential layer of uncertainty at a time when they are already grappling with a rising number of coronavirus infections in many parts of the world, including the western U.S.

The S&P 500 slipped 0.2%, after briefly flirting with correction territory, considered a drop of 10% or more from a recent high. The Dow Jones Industrial Average dropped 58 points, while the Nasdaq Composite declined 0.2%.

Still, the turnaround might just be a temporary pause in the recent selloff, some analysts said. Investors are most concerned with the coronavirus and the pace of the economic recovery. Without another round of stimulus, investors and others worry the economy is vulnerable to another lashing if the pandemic worsens. New data Thursday morning showed hundreds of thousands of Americans continue to rely on jobless benefits, keeping claims near their historic highs.

Federal Reserve officials on Wednesday stepped up calls for additional fiscal relief to bolster the economy. Chairman Jerome Powell and his colleagues said Congress and the White House, more than the Fed, had the power to hasten a faster recovery.

"America sneezes and the rest of the world catches a cold: if you're being told that the world's largest economy will not recover without stimulus and they can't agree on a stimulus, then that has to be a negative piece of news," said Tony Yarrow, a multiasset fund manager at Wise Funds. "The mood among investors is extremely pessimistic at the moment."

Mr. Powell is scheduled to offer congressional testimony on Capitol Hill Thursday for a third day this week. He is expected to give an overview of the economy and monetary policy, which could provide clues into the central bank's actions going forward.

In bond markets, the yield on the benchmark 10-year Treasury edged down to 0.664%, from 0.676% Wednesday.

The latest data on new jobless claims for the week ended Sept. 18 showed that the number of workers applying for jobless benefits rose to 870,000, compared with 866,000 last week.

"This week's rise in initial jobless claims will come as a surprise to the market," said Richard Flynn, U.K. managing director at Charles Schwab. "Despite some encouraging numbers in recent weeks, the level of weakness remains unprecedented, and the labor market's recovery will likely rely on further fiscal support from the government."

Daily new coronavirus cases in the U.S., which began to trend downward in mid-July, have also been going up since mid-September in a worrying sign for investors.

The timeline for a coronavirus vaccine being widely available also remains unclear: Dr. Anthony Fauci, the nation's top infectious-disease expert, expects to see data from Phase 3 clinical trials of some candidates indicating whether the vaccines are safe and effective by November or December of this year.

In contrast, Mr. Trump has repeatedly claimed that a vaccine will be available before the early November elections. On Wednesday, he appeared to criticize forthcoming Food and Drug Administration guidelines being developed around the release of a vaccine, adding to concerns that the health issue was being politicized.

Overseas, the pan-continental Stoxx Europe 600 dropped 1.1% as investors weighed the prospect of stringent measures being introduced in countries such as Germany, France and the U.K. following a rise in infections.

"We all assumed restrictions would be over by September, but it turns out that we're in September and we're being promised another six months of dislocation," said Mr. Yarrow. "Everyone's having to reset their expectations."

In Asia, major benchmark stock indexes closed lower as the negative sentiment spread overnight. The Shanghai Composite Index retreated 1.7%, and Hong Kong's Hang Seng Index fell 1.8%.

Write to Anna Hirtenstein at and Michael Wursthorn at


(END) Dow Jones Newswires

September 24, 2020 10:50 ET (14:50 GMT)

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