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.
“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.
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Appeared in the October 20, 2020, print edition as ‘Dow Falls 410 as Stimulus Remains Uncertain.’