By Joy Wiltermuth, and Andrea Riquier
Stock index benchmarks slipped lower Wednesday afternoon, as investors monitored fiscal stimulus talks in Washington and sifted through a stack of corporate earnings reports, including disappointing results from pandemic highflier Netflix Inc.
What are major benchmarks doing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.83% shed 47 points, or 0.2%, to trade near 28,260, while the S&P 500 /zigman2/quotes/210599714/realtime SPX +0.88% fell 2 points, 0.1%, near 3,440. The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP +0.70% was 22 points lower, or 0.2%, at about 11,491.
The Dow on Tuesday rose 113.37 points, or 0.4%, to finish at 28,308.79, after rising as high as 28,575.03 earlier. The S&P 500 added 16.20 points to end at 3,443.12, a gain of 0.5%, while the Nasdaq Composite advanced 37.61 points or 0.3%, to 11,516.49.
What’s driving the market?
Senate Majority Leader Mitch McConnell, R-Ky. on Wednesday urged Republicans and the White House against striking a big coronavirus deal with Democrats before the Nov. 3 election, according to news reports .
House Speaker Nancy Pelosi, D-Calif., and U.S. Treasury Secretary Steve Mnuchin were in the midst of ongoing negotiations Wednesday on another fiscal stimulus package, but the Republican-controlled Senate remains a potential sticking point though, with McConnell reportedly saying that work on pandemic aid could interfere with the confirmation of Supreme Court nominee Amy Barrett.
Stocks were buoyed Tuesday as talks continued, with Pelosi waving off her earlier self-imposed deadline for a pre-election deal.
“The markets are so focused on the election, but this is what’s driving the day-to-day,” said Keith Lerner, chief market strategist for Truist/SunTrust Advisory Services, in an interview. “Often the market is what puts pressure on Congress to act. But the markets have been steady and the economic data has been steady. The best thing for the market is that expectations have come back down. If we don’t get anything, I think we’ll have a minor hiccup, but if we do get something we may get some upside. I don’t think it’s fatal to the economy to wait until after the election.”
Lerner expects the final two weeks before the election to be “a sloppy trade with a lot of back and forth and not a lot of movement.” But he also sees it as a good opportunity to buy on any dips, and possibly to start rotating toward cyclical sectors like industrials /zigman2/quotes/202026558/composite XLI +1.19% and materials /zigman2/quotes/204467551/composite XLB +2.02% .
Charalambos Pissouros, senior market analyst at JFD Group, said in a Wednesday note that investors should take developments day by day, warning that the continued rapid spread of COVID-19 could threaten the global economy if it forces further lockdowns of business activity. Investors might also be wary of increasing long positions in equities as the Nov. 3 U.S. presidential election draws near, he said.
U.S. corporate earnings reporting season remains in full swing as well. Results from closely watched Netflix Inc. /zigman2/quotes/202353025/composite NFLX +0.16% disappointed investors after Tuesday’s closing bell, reflecting a slowdown in new subscribers and a wide miss on earnings . Shares in the video streaming giant were down more than 6%, but still rising more than 50% in the year to date as pandemic lockdowns fueled demand.
Several Federal Reserve officials will speak Wednesday. Gov. Lael Brainard, in remarks to the Society of Professional Economists in the U.K. said the U.S. would be in for “a slower and weaker recovery” if Congress failed to pass another aid package.
Later, Cleveland Fed President Loretta Mester said the central bank could do a better job of communicating its policy goals to the general public. Minneapolis Fed President Neel Kashkari is set to talk about education at a Minnesota event at noon. Dallas Fed President Robert Kaplan is set to deliver a speech in Houston at noon Eastern.
The Fed’s Beige Book, a compilation of economic anecdotes, is scheduled for releaset 2 p.m. Eastern.
Which companies are in focus ?
In global equities, the Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP +0.07% closed down 0.1%, while Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI +0.40% gained 0.8% and Japan’s Nikkei 225 Index /zigman2/quotes/210597971/delayed JP:NIK -0.22% advanced 0.3%. The pan-European Stoxx 600 Europe /zigman2/quotes/210599654/delayed XX:SXXP +0.59% was off 1.3%, while London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.92% slid 1.9%.
Oil futures were lower in early trade, with the U.S. benchmark down $1.60, or 3.9%, to $40.09 a barrel. Gold futures /zigman2/quotes/210039572/delayed GCZ20 +0.05% , were up $15.20 or 0.6%, to $1,930.60 an ounce.
The ICE U.S. Dollar Index /zigman2/quotes/210598269/delayed DXY +0.10% , a measure of the currency against a basket of six major rivals, was down 0.5%.
The yield on the 10-year Treasury note /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y +6.64% was up 2 basis points to 0.805%, near its highest since June on stimulus hopes . Yields and bond prices move in opposite directions.
W illiam Watts contributed reporting