Stocks drop on stimulus deadlock as banks tumble
Stocks fell on speculation that recent gains have outpaced prospects for a quick end to the stalemate over fresh economic stimulus. Treasurys and the dollar climbed.
Banks led losses in the S&P 500, with JPMorgan Chase & Co. and Citigroup Inc. sinking as investors worried that third-quarter earnings signaled just a pause in pain from soured loans. Eli Lilly & Co. tumbled after putting its government-sponsored antibody test on hold due to potential safety concerns, hours after Johnson & Johnson paused its covid-19 vaccine trial. Tech shares outperformed as Amazon.com Inc.'s Prime Day sale kicked off. Apple Inc. unveiled its iPhone 12 line with 5G speeds, but the shares dropped, giving up part of Monday's surge.
Prospects for U.S. fiscal stimulus before Election Day dimmed on Tuesday, with House Speaker Nancy Pelosi, D-Calif., demanding the Trump administration revamp its latest offer and Senate leader Mitch McConnell, R-Ky., pushing a smaller-scale strategy that she quickly rejected. His proposal to vote next week on just one provision appeared to stoke opposition even from President Donald Trump, who tweeted "Go big or go home!!"
"It's been a roller-coaster ride in terms of communication from both sides," said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management. "There are still going to be significant pockets of stress in the economy," and a fiscal package could help bridge the gap until we do get a vaccine, he added.
Meanwhile, Democrats grilled U.S. Supreme Court nominee Amy Coney Barrett for hours about abortion rights, health-care law, guns and election disputes but made little progress derailing her likely Senate confirmation and a strengthened conservative majority on the court.
These are some of the main moves in markets:
Stocks
- The S&P 500 fell 0.6% as of 4 p.m. New York time.
- The Stoxx Europe 600 Index sank 0.5%.
- The MSCI Asia Pacific Index rose 0.1%.
Currencies
- The Bloomberg Dollar Spot Index jumped 0.5%.
- The euro decreased 0.5% to $1.1749.
- The Japanese yen weakened 0.1% to 105.48 per dollar.
Bonds
- The yield on 10-year Treasurys slid four basis points to 0.73%.
- Germany's 10-year yield fell one basis point to -0.56%.
- Britain's 10-year yield decreased three basis points to 0.239%.
Commodities
- The Bloomberg Commodity Index fell 0.3%.
- West Texas Intermediate crude rose 2.1% to $40.24 a barrel.
- Gold weakened 1.5% to $1,894.40 an ounce.
