So Much For Stimulus

 

By Nicholas Jasinski |  Tuesday, October 6 Letdown. The stock market really wants a fiscal stimulus and coronavirus relief bill from Washington. But it appears that investors will have to wait for a while. “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” President Donald Trump tweeted shortly before 3 p.m. today. That immediately knocked stocks from their modest afternoon gains. The Dow Jones Industrial Average ended the day down 1.3%, the S&P 500 fell 1.4%, and the Nasdaq Composite lost 1.6%. Ten of the S&P 500’s 11 sectors ended the day in the red, with utilities the sole gainer, as 401 of the index’s components fell. Although still pointing in the right direction, recent U.S. economic data have shown a decelerating rebound and unemployment remains high. Economists and Federal Reserve Chairman Jerome Powell have emphasized the need for additional fiscal policy support to keep the recovery going and spur the return of more jobs. Speaking before a virtual conference earlier today, Powell called the potential consequences of failing to do so "tragic." A bill could include enhanced unemployment benefits, budget support for state and local governments, and another round of direct payments to individuals. Targeted support for the most coronavirus-affected industries—including airlines or restaurants—was also included in drafts of the legislation. Despite being in the thick of campaign season and with a contentious Supreme Court justice confirmation process on the immediate horizon, congressional leaders and White House representatives had made progress toward a compromise on a fiscal stimulus bill in the past week or so. Democrats had lowered the price tag of their bill, while Republicans had raised theirs, even if the two sides remained far apart. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin—negotiating on behalf of the White House—met yesterday and were scheduled to continue discussions today. That had previously boosted stocks. Time will tell whether the president’s pause on talks is merely a negotiating tactic, or whether it will take a unified Congress and White House under one party postelection to get a bill passed. Boeing stock was the biggest mover in the S&P 500 today, closing down 6.8%. The aerospace giant revealed an updated industry forecast for the coming decade, which calls for 11% fewer planes than predicted a year earlier. General Electric stock lost 3.7% after reportedly receiving a “Wells notice” from the Securities and Exchange Commission. That means civil charges could be coming for the company related to its accounting practices in past years. Shares of Logitech International and Sonos lost 6.1% and 7%, respectively, on fears of coming competition from Apple. The iPhone maker stopped selling speakers and headphones made by other companies, suggesting it could be coming out with additional new devices. Alteryx was the notable gainer of the day, closing up 28.3%. The data-analytics company raised its sales outlook and named a new CEO, Mark Anderson,  yesterday evening.

 

DJIA: -1.34% to 27,772.76 S&P 500: -1.40% to 3,360.97 Nasdaq: -1.57% to 11,154.60 The Hot Stock: Steris +3.6% The Biggest Loser: Boeing -6.8% Best Sector: Utilities +0.9% Worst Sector: Communication Services -2.1%