By Will Horner and Logan Moore 

U.S. stocks traded in a narrow range Wednesday, closing down, as investors assessed prospects for a fresh stimulus bill and the health of major American businesses through their quarterly reports.

The S&P 500, which drifted between gains and losses, was down 0.2% as of the 4 p.m. close of trading in New York, while the Dow Jones Industrial Average fell 99 points, or 0.4%. The tech-heavy Nasdaq Composite Index lost 0.3%.

Treasury yields extended their climb, with the yield on the 10-year note reaching its highest level since June. The 10-year recently yielded 0.801%, from 0.796% Tuesday.

Most investors have recently been focused on any developments in Washington over a possible stimulus package. Democratic negotiators and the White House have said they would press ahead with talks on the next coronavirus-relief package, setting aside a Tuesday deadline proposed by House Speaker Nancy Pelosi to hammer out the accord. Mrs. Pelosi signaled there was progress after her conversation with Treasury Secretary Steven Mnuchin.

The two sides didn't decisively establish whether a deal will be possible before Election Day, though White House chief of staff Mark Meadows said Mrs. Pelosi and the administration are trying to secure an agreement before the weekend. Any deal is likely to face deep opposition from Senate Republicans, especially if the proposed spending package approaches $2 trillion.

"What we are seeing at the moment is the market trading on these headlines, but to us, a pre-election stimulus deal seems unlikely," said Seema Shah, chief strategist at Principal Global Investors. "We can hear as much as we want from Pelosi and Mnuchin about progressing talks, but some senators have said simply that they won't support any package."

Investors are also parsing third-quarter earnings reports to gauge how businesses are weathering the economic downturn.

The recent economic data suggests the recovery of corporate profits remains ongoing, said Dan Suzuki, chief investment officer of Richard Bernstein Advisors LLC, who noted reports on the manufacturing sector, the housing market and labor.

"Right where we are is sort of at the intersection of the big tug-of-war that's been happening," Mr. Suzuki said. "On one hand you have the negative impacts of the pandemic, and at the same time stimulus is losing momentum."

He's told clients there are some less-risky areas to invest in at the moment, including the transportation sector and health care.

Among recent earnings reports, Snap shares jumped 29% after its revenue grew by more than half, significantly exceeding analysts' expectations. Shares of other social-media companies also rose.

Netflix shares fell 5.4% after the company said subscriber growth slowed in the third quarter, highlighting the fresh challenges from competitors ramping up their own streaming services.

Swedish telecommunications company Ericsson saw its New York-listed shares rise 11% premarket after it reported third-quarter profits that beat analysts' views.

After markets close, Tesla, Chipotle Mexican Grill, and Whirlpool are slated to release their earnings reports.

Andrew Mies, chief investment officer of Wichita, Kan., investment adviser 6 Meridian, said it's important to look through the short-term news on companies as earnings season continues.

"The same companies that are doing really well right now because of the work-from-home trend, are not the same ones that will be successful in 2021," Mr. Mies said.

Like other money managers and investors, he's been advising clients to remain focused on 2021 and to stay positive, yet realistic about the long-term effects of coronavirus.

Meanwhile, many in the market remain focused on the Nov. 3 elections. Markets have been jittery ahead of the elections, with many investors wary of taking big bets.

After the surprise of the 2016 election, many investors were choosing not to make strong calls ahead of the vote and opting for sectors that were likely to be a safe bet regardless of the outcome, said Kiran Ganesh, global head of investment communications at UBS Global Wealth Management.

"There is little rational reason to take a strong position on one of these one-off events, events that we have learned in recent years can take you by surprise," he said. "Keep politics out of the portfolio."

Overseas, the pan-continental Stoxx Europe 600 fell 1.3%.

In Asia, markets were buoyed by signs of progress in the stimulus talks. Japan's Nikkei 225 index rose 0.3% by the close of trading, and the Hang Seng Index climbed 0.8%.

In commodity markets, oil prices edged lower. Brent crude, the international benchmark, dropped 1.1% to $42.69 a barrel. Gold ticked 0.7% higher.

Write to Will Horner at William.Horner@wsj.com

 

(END) Dow Jones Newswires

October 21, 2020 16:17 ET (20:17 GMT)

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