NEW YORK (AP) — Stocks are headed lower on Wall Street Wednesday, on pace to extend losses from a day earlier, 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 was down 163 points, or 0.6%, to 28,518, as of 2:55 p.m. Eastern time, and the Nasdaq composite was down 0.9% 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 Hammill 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 4.3% after its revenue fell short of analysts’ forecast, while Wells Fargo dropped 5.3% after its earnings were lower than Wall Street expected.
Goldman Sachs rose 0.3% after reporting stronger profit than analysts expected. U.S. Bancorp was 0.4% 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 2% rise for crude oil prices helped. So did a report that ConocoPhillips is in talks to buy Concho Resources. Concho jumped 12.1% following the report from Bloomberg News.
Tech stocks fell, weighing down the broader S&P 500. Apple slipped 0.2%, while Amazon fell 2.5% and Microsoft slid 1.1%.
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. Small company stocks, the biggest gainers so far this month, also fell. The Russell 2000 small-caps index was down 0.8%.
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.
The rate at which Americans save money spiked earlier this year as the pandemic-related business shutdowns limited where people could shop. Thus far, that extra savings cushion has helped people who lost their job weather the loss of extra unemployment benefits, said Elyse Ausenbaugh, global market strategist at J.P. Morgan Private Bank.
“It’s not going to last forever, especially with the unemployment rate so high,” she said. “That really underscores the need for the government to gas the economy.”
European and Aisian markets ended mixed.
AP Business Writer Elaine Kurtenbach contributed.