U.S. stock futures traded lower overnight on Tuesday after President Donald Trump canceled stimulus talks following the November election.
Dow futures were down 100 points. The S&P 500 futures and the Nasdaq 100 futures are down 0.53% and 0.5%, respectively.
In regular trading on Tuesday, the Dow Jones Industrial Average closed at 375 points after Trump tweeted through the White House that talks on a second coronavirus stimulus deal with Democrats have stalled. Earlier in the session, stocks rallied on hopes that there would be another relief package to boost markets as the coronavirus outbreak.
“I have instructed my delegates to close the negotiations after the election, when I win, then we will pass a big stimulus bill that focuses on hardworking Americans and small businesses,” Trump said in a tweet on Tuesday.
The S&P 500 fell 1.4% and the Nasdaq Composite 1.57% on Tuesday.
“It’s just so disruptive,” Tom Block, a Washington policy strategist at FundStrate, told CNBC. “” There is no turning back around the president. My opinion is that this is negative for the market. “
Some on Wall Street speculated that Trump’s move was just a ploy to negotiate, while others suggested to the president that the economy needed $ 2 trillion in financial costs.
Federal Reserve Chairman Jerome Powell said Tuesday that the economy needs more aggressive fiscal and monetary stimulus for economic recovery, which he said still has “a long way to go.”
Powell said a lack of support could “lead to a weak recovery, which could lead to unnecessary difficulties for homes and businesses” and a failure to rebound that could progress faster than expected in this way. “On the contrary, it seems to be at risk of overstretching. For now, it should be reduced,” Powell added.
“We need more stimulus, and this is against the Federal Reserve’s advice, and the markets don’t really like the Federal Reserve’s advice … I don’t think it’s done for good, but I’ll say it,” Powell said. That is a very negative sign and will probably push until after the election, ”Block added.
Cleveland Fed President Loretta Mester said Tuesday that the end of the stimulus talks means that economic recovery will be “much slower” than originally expected.
The Federal Open Market Committee will publish the minutes of its September meeting on ET on Wednesday at 2 p.m. The FOMC did not take any action on interest rates in September, leaving it close to zero.
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– CNBC With no reporting from Pipa Stevens.
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