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NEW YORK: Wall Street ended weaker on Wednesday, led lower by Amazon and Microsoft as investors lost hope that a US fiscal stimulus would pass before the November presidential election.
Pessimistic comments from Treasury Secretary Steven Mnuchin that a deal would likely not be reached before the vote added to fragile sentiment following a mixed bag of quarterly earnings reports from major Wall Street lenders.
“At this point it would be difficult to do something before the elections and execute it, just considering where we are and the level of detail, but we will try to continue working on these issues,” Mnuchin said at a conference. sponsored by the Milken Institute.
US stocks had rallied in recent sessions on optimism that the government would provide new stimulus to reduce the damage caused by the coronavirus pandemic.
“The optimism took hold like a rocket last week and now it’s coming back down to earth a bit,” said Mike Zigmont, head of trade and research at Harvest Volatility Management in New York. “I think a stimulus like a big macro event is already built into stock prices. It’s just a matter of when the details emerge and when the stimulus takes effect.”
Amazon fell 2.3% and Microsoft lost 0.9%, both weighing more than any other stock in the S&P 500.
The Dow Jones Industrial Average fell 0.58% to close at 28,514 points, while the S&P 500 lost 0.66% to 3,488.67.
The Nasdaq Composite fell 0.8% to 11,768.73.
Bank of America fell 5.3% and Wells Fargo fell 6% after disappointing quarterly results.
That left the S&P 500 bank index lower at 2.4%.
The third-quarter earnings season is underway, with signs of an overall improvement in expectations about the impact of the pandemic on US businesses. Analysts expect earnings to fall 19% from a year earlier, according to Refinitiv IBES data, compared to a 25% drop expected on July 1.
Markets have also begun to digest the prospect of a Democratic victory, strategists and fund managers said.
While many investors see Democratic candidate Joe Biden as more likely to raise taxes, they are increasingly pointing to the potential benefits of a Biden presidency, such as higher spending on infrastructure and less global business uncertainty.
UnitedHealth Group Inc fell 2.9%, despite raising its earnings forecast, as the US insurer said it was difficult to predict the consequences of the pandemic on earnings.
Issues in decline outnumbered those advancing on the NYSE by 1.51 to 1; On the Nasdaq, a 1.95-to-1 ratio favored declines.
The S&P 500 posted 23 new 52-week highs and no new lows; the Nasdaq Composite recorded 109 new highs and 14 new lows.
The volume of US exchanges was 8.2 billion shares, compared to the average of 9.6 billion in the last 20 trading days.
– Reuters
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