NEW YORK (AP) — Stocks are slipping on Wall Street Wednesday as talks drag on in Washington over another economic stimulus package.
The S&P 500 fell 0.7% in afternoon trading after spending the morning swaying between small gains and losses. The decline comes a day after it broke a strong four-day winning streak. The Dow Jones Industrial Average slipped 0.5%, or 148 points, to 28,531, as of 1:30 p.m. Eastern time, and the Nasdaq composite was down 1% after losing an earlier gain of 0.6%.
The odds of a big support package for the U.S. economy from Washington in the near term continue to diminish. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi spoke by phone again Wednesday morning but didn't reach an agreement, Pelosi aide Drew Hamill tweeted, adding that the two plan to speak again Thursday. Mnuchin said at a conference sponsored by the Milken Institute that it would be “difficult” to get a deal done before the presidential election next month.
"The time for being able to pull this off is now coming to a close,” said Rod von Lipsey, managing director at UBS Private Wealth Management. “The market has been listless because it understands that it’s probably not going to happen.”
Investors are still anticipating some kind of an aid package eventually passing, he said, but it will now likely wait until after the election.
Trading in stock markets overseas was subdued as coronavirus counts climb around the world, raising the risk of more government restrictions on businesses. Treasury yields were down, while prices for crude oil and gold were up.
This week’s kick-off to earnings reporting season is also painting a mixed picture for investors.
Big banks are traditionally the first companies to tell investors how much profit they made in the prior quarter, and Bank of America and Wells Fargo fell to some of the sharpest losses in the S&P 500 following their reports. Bank of America sank 4.1% after its revenue fell short of analysts’ forecast, while Wells Fargo dropped 4.9% after its earnings were lower than Wall Street expected.
Goldman Sachs climbed 1.1% after reporting stronger profit than analysts expected. U.S. Bancorp was 0.5% higher following its earnings report, which was also stronger than analysts expected.
Across the S&P 500, analysts are expecting companies to report another drop in profits for the summer from year-ago levels. But they’re forecasting the decline to moderate from the nearly 32% plunge from the spring as the economy has shown signs of improvement.
The sharpest profit drops for the quarter are expected to come from energy stocks, but the sector rose Wednesday to some of the biggest gains among the 11 that make up the S&P 500 index. A 1.6% rise for crude oil prices helped. So did a report that ConocoPhillips is in talks to buy Concho Resources. Concho jumped 13.1% following the report from Bloomberg News.
Tech stocks fell, weighing down the broader S&P 500. Apple gave slipped 0.8%, while Amazon fell 2.7% and Microsoft dipped 1.5%.
Because of their massive size, the movements of Big Tech stocks have an outsized effect on the S&P 500 and other indexes.
The S&P 500 was split between gainers and losers.
The yield on the 10-year Treasury note fell to 0.72% from 0.74% late Tuesday despite a report showing that inflation at the wholesale level strengthened more than economists expected last month.
Prices for producers rose 0.4% last month from August, double economists’ expectations. But even though inflation firmed, economists say it’s still subdued amid a weakened economy.
The Federal Reserve has also indicated that it will keep interest rates at nearly zero for a while to support the economy, even if inflation hits its target level.
Aid for the economy from elsewhere in Washington, though, has been harder to come by. Hopes are fading that Congress and the White House can agree on another round of support in the near term.
“The cold reality that markets have refused to countenance is that even if an agreement was reached, its chances of being enacted before the November election are about zero,” said Jeffrey Halley of Oanda. “Still, this is 2020, the year where markets never let reality get in the way of a good story.”
Economists and the head of the Federal Reserve have said the economy will likely need such stimulus. Earlier benefits for laid-off workers and other support that Congress approved earlier this year have expired.
Rising coronavirus counts in many countries are raising the urgency to develop vaccines and treatments and setbacks in that process tend to discourage investors.
On Tuesday, independent monitors paused enrollment in a study testing the COVID-19 antiviral drug remdesivir plus an experimental antibody therapy being developed by Eli Lilly. The company said the study was paused “out of an abundance of caution.” The news followed a disclosure late Monday by Johnson & Johnson, which said it had to temporarily pause a late-stage study of a potential COVID-19 vaccine “due to an unexplained illness in a study participant.”
In European stock markets, the German DAX returned 0.1%, and the French CAC 40 fell 0.1%. The FTSE 100 in London fell 0.6%.
In Asia, Japan’s Nikkei 225 erased early losses to gain 0.1%. The Hang Seng in Hong Kong eked out a late gain of 0.1%, South Korea’s Kospi lost 0.9% and stocks in Shanghai shed 0.6%.
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AP Business Writer Elaine Kurtenbach contributed.
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