Pins and needles: US stocks close lower as stimulus talks drag

Wall Street’s three major averages closed lower on Wednesday after a volatile trading session, as investors worried whether difficult negotiations in Washington, DC would produce a deal for a fresh United States coronavirus stimulus package.

The Dow Jones Industrial Average closed down 97.97 points, or 0.35 percent, at 28,210.82.

The S&P 500 – a gauge for the health of US retirement and college savings reports – lost 0.22 percent, while the tech-heavy Nasdaq Composite Index shed 0.28 percent.

White House Chief of Staff Mark Meadows said that while there are a number of differences between the White House and Congressional Democrats, Republican President Donald Trump was “willing to lean into” working on an agreement.

Before starting afternoon talks with Treasury Secretary Steven Mnuchin, US House Speaker Nancy Pelosi said there was still a chance for a deal despite resistance from Senate Republicans, though she acknowledged it might not pass until after the November 3 Election Day.

“As long as she keeps dangling the carrot out there that there’s still a chance that something could get done, investors continue to remain optimistic,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, California.

“You would rather have more long exposure than have too much cash if an agreement is reached. That’s a big if,” James added.

James said investors were holding out hope a deal could be reached on Thursday.

“Everybody’s going to be sitting on pins and needles waiting for the next headline between now and the end of tomorrow’s trading day,” he explained.

After the closing bell, Pelosi spokesman Drew Hammill said the day’s session “brings us closer to being able to put pen to paper to write legislation”.

Instead of ploughing money into the market broadly, Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut said investors picked stocks as they looked at third-quarter financial results.

Of the 11 major industry sectors, nine closed lower, with energy leading the percentage decliners. Communications services was the biggest gainer.

Shares in Snapchat messaging app owner Snap Inc finished up 28 percent after it beat user growth and revenue forecasts, as more people signed up to chat with friends and family during the COVID-19 pandemic.

The news helped boost other social media companies with Facebook Inc up 4 percent and Twitter Inc climbing 8 percent in the communications services index. Smaller social media firm Pinterest Inc also gained close to 9 percent.

Dampening the mood, however, was Netflix Inc, which tumbled almost 7 percent after it kicked off earnings for the market’s high-flyers club. The video-streaming service missed expectations for subscriber growth as competition increased and live sports returned to television.

Shares in electric-car maker Tesla Inc rose 4 percent after the closing bell after it reported quarterly earnings. Tesla beat analysts’ estimates for third-quarter revenue as it made record vehicle deliveries, overcoming disruptions caused by the COVID-19 pandemic.

Of the 84 S&P 500 firms that have reported third-quarter results, 85.7 percent have topped expectations for earnings, according to IBES Refinitiv data.

Investors also have their eyes on the upcoming elections. Trump and Democratic challenger Joe Biden will face off in their second and final debate on Thursday night.