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All three major stock indices closed in the red on Tuesday, reflecting uncertainty about COVID-19 vaccines and treatments, and the next round of US coronavirus relief aid.
Wall Street lost ground after two major drug makers announced they were halting their COVID-19 clinical trials over safety concerns and that a deal on the next round of coronavirus relief aid from the United States remains in the air.
Johnson & Johnson announced Monday that it was pausing clinical trials of a COVID-19 vaccine candidate due to an unexplained illness in a study participant. The delay weighed on the company’s stock, even after its earnings report. Its shares lost 2.3 percent.
At the end of the session, rival Eli Lilly and Company said it was also stopping its coronavirus antibody test due to safety concerns, sending its shares down 2.9 percent.
“We have this recent spike in coronavirus cases that coincides with the big pharmaceutical companies stopping vaccine trials,” said Robert Pavlik, chief investment strategist at SlateStone Wealth LLC in New York. “That is making the market nervous, and in response, you are seeing blocking stocks move higher.”
All three major stock indices closed in the red on Tuesday, and Microsoft Corp shares helped mitigate the loss of the Nasdaq, which weighed heavily on technology.
Hopes that a new round of coronavirus aid would be approved were dashed when US House Speaker Nancy Pelosi rejected the $ 1.8 trillion White House aid proposal, saying that President Donald Trump’s plan “falls far short of what this pandemic and deep recession demands.”
Senate Majority Leader Mitch McConnell said the Republican-led Senate would vote Monday on a reduced stimulus package.
“[Washington is] playing with the emotions of the market and people’s financial futures, “added Pavlik of SlateStone Wealth. “As this continues, the market is looking beyond what they are saying because it really believes that the stimulus will come some time after the election.”
Although JPMorgan comfortably beat consensus earnings estimates, benefiting from a boom in its commercial business, its peer Citigroup, while also exceeding expectations, was hit by low interest rates and a slowdown in loan demand. Its shares fell 1.6 percent and 4.8 percent, respectively.
The broader S&P Banking Index lost 2.7 percent.
Apple Inc unveiled the latest incarnation of its flagship device, the iPhone 12 with 5G connectivity. Its shares fell 2.7 percent.
The Dow Jones Industrial Average fell 157.71 points, or 0.55 percent, to 28,679.81.
The S&P 500 lost 22.29 points, or 0.63 percent, to 3,511.93 and the Nasdaq Composite fell 12.36 points, or 0.1 percent, to 11,863.90.
The third-quarter reporting season has left the starting gate, and analysts now see earnings for the S&P 500 as a whole down 19.6 percent year-on-year, according to Refinitiv.
Other earnings available this week include Bank of America Corp, Goldman Sachs Group Inc, Wells Fargo & Co, UnitedHealth Group and United Airlines Holdings Inc expected on Wednesday, and Morgan Stanley and Honeywell International Inc for Thursday.
Delta Air Lines Inc shares fell 2.7 percent after the commercial airline reported a 76 percent drop in quarterly revenue and announced that it had delayed a specific suspension of its cash bleed.
Boeing Co reported order cancellations for its 737 MAX aircraft on the ground and said deliveries were less than half the number from the same month a year ago. Its shares, down 3.1 percent, were the biggest drag on the Dow.
The downside issues outnumbered those that advanced on the NYSE by a ratio of 2.00 to 1; On the Nasdaq, a 1.50-to-1 ratio favored declines.
The S&P 500 posted 39 new 52-week highs and a new low; the Nasdaq Composite registered 123 new highs and 14 new lows.
The volume of US exchanges was 8.50 billion shares, compared to the average of 9.72 billion for the last 20 trading days.
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