By William Watts and Sunny Oh
U.S. benchmark stock indexes closed sharply lower Tuesday after President Donald Trump said he would end negotiations on a new fiscal stimulus package, unnerving investors who hoped Washington lawmakers would strike a deal soon.
What are major benchmarks doing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -1.75% gave up a gain of more than 200 points, falling 375.88 points, or 1.3%, to end at 27,772.76, while the S&P 500 /zigman2/quotes/210599714/realtime SPX -2.45% finished 47.66 points, or 1.4%, lower at 3,360.97. The Nasdaq Composite /zigman2/quotes/210598365/realtime COMP -3.52% fell 177.88 points, or 1.6%, to 11,154.60.
The Dow on Monday rose 465.83 points or 1.7% to finish at 28,148.64, while the S&P 500 rose 60.19 points, or 1.8%, to close at 3,408.63. The Nasdaq finished at 11,332.49, up 257.47 points, or 2.3%.
What’s driving the market?
Stocks swooned after Trump said in a tweet that he would stop negotiating on another fiscal stimulus bill until after the November elections and would focus on advancing Amy Coney Barrett’s confirmation to the Supreme Court. His comments came the day after he left Walter Reed Medical Center after a three-night stay.
“Certainly, there was this continual hope in markets that we would get something through [on fiscal stimulus]. That’s now been pushed out by Trump,” Max Gokhman, head of asset allocation at Pacific Life Fund Advisors, told MarketWatch.
Fears the economic recovery could stall without another round of fiscal support have been on the rise just as unemployment began falling again in recent months as businesses reopened from lockdowns imposed to combat the coronavirus pandemic.
Crunchtime is approaching for a fiscal deal, said Tom Plumb, portfolio manager of the Plumb Balanced Fund, in an interview.
A plea Monday by management of Southwest Airlines /zigman2/quotes/201071949/composite LUV -1.65% to union workers to make sacrifices due to the inaction of the federal government was a “shot across the bow,” Plumb said.
As traditionally well-managed companies suffer, the potential for mass layoffs and other hardship come more sharply into focus, he said.
In a speech to the National Association for Business Economics, Powell repeated that the U.S. economy needs more fiscal support even though the recovery from the “natural disaster” of the coronavirus pandemic so far has been strong.
Shares in Cineworld /zigman2/quotes/206525056/delayed UK:CINE -2.79% plunged 57% on Monday, after the world’s second-largest movie chain confirmed it will temporarily close its cinemas in the U.K. and the U.S., putting 45,000 jobs at risk .
In economic data, the U.S. trade deficit climbed almost 6% in August to $67.1 billion, the third widest gap on record, reflecting a continuing struggle by American exporters to recover all the ground lost in the early stages of the coronavirus pandemic. Economists polled by MarketWatch has forecast a $66.7 billion trade gap.
Hiring and job openings in the private sector fell in August in a sign the U.S. labor market was cooling off as an economic recovery lost some of its earlier momentum, a government survey showed.
Which companies are in focus?
What are other markets doing?
In global equities, Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -3.64% rose 0.9%, while Japan’s Nikkei 225 /zigman2/quotes/210597971/delayed JP:NIK -3.99% gained 0.5%. The pan-European Stoxx 600 Europe /zigman2/quotes/210599654/delayed XX:SXXP -0.42% and London’s FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX -0.09% each rose 0.1%.
Gold edged lower , with the December contract /zigman2/quotes/201432642/composite GOLD -3.25% falling $11.40, or 0.6% to settle at $1,901.10 an ounce on Comex. Oil futures added to big gains scored on Monday, with the U.S. benchmark up $1.45, or3.7%, to settle at $40.67 a barrel.
The greenback is up 0.2% for the day based on trading in the ICE U.S. Dollar Index. /zigman2/quotes/210598269/delayed DXY +0.31%