Dow turns negative, gives up 105-point gain as traders hope for stimulus deal ahead of deadline
U.S. stocks slipped on Monday as investors hoped for a stimulus deal from Washington, although a rising number of Covid-19 cases dampened sentiment.
The Dow Jones Industrial Average traded 41 points lower, or 0.1%. Earlier in the day, the 30-stock average was up more than 100 points. The S&P 500 dipped 0.2% and the Nasdaq Composite pulled back 0.1%.
House Speaker Nancy Pelosi’s office said over the weekend that she is giving the Trump administration 48 hours to reach an aid deal before the Nov. 3 election. Pelosi and Treasury Secretary Steven Mnuchin continued their discussions on Saturday. They agreed to speak again on Monday.
A continued economic recovery in China also boosted sentiment on Monday. The world’s second largest economy reported third-quarter GDP growth of 4.9%, which was on the low end of expectations, but indicates an improving outlook.
“[China’s] Q3 GDP fell a bit short of expectations, but the Sept figures (retail sales and IP) both exceeded forecasts, and this is giving a boost to equity sentiment,” noted Adam Crisafulli of Vital Knowledge.
Meanwhile, global coronavirus cases hit 40 million on Monday, which put a damper on bullish sentiment.
A CNBC analysis of Johns Hopkins University data showed Covid-19 cases were growing by 5% or more in 38 states as of Friday. Nationwide, the daily case average has risen by more than 16% on a week-over-week basis to nearly 55,000. New coronavirus infections in Europe are rising by about 97,000 per day, up 44% from the prior week.
“The 48 only relates to if we want to get it done before the election, which we do,” Pelosi told ABC’s “This Week” on Sunday. “We’re saying to them, we have to freeze the design on some of these things — are we going with it or not and what is the language? I’m optimistic, because again we’ve been back and forth on all this.”
Stocks are coming off a week of choppy trading action.
The S&P 500 and Dow fell for three straight days last week before closing slightly higher on Friday. The Nasdaq Composite posted its first four-day losing streak since September.
“The many cross-currents we have been fretting over in recent weeks remain omnipresent,” said Sherif Hamid, a strategist at Jefferies, in a note. “The US elections are close at hand, fiscal stimulus remains a key near-term potential catalyst, and developments on the virus front remain critical to the longer-term outlook.”
“A lot is very likely to happen over the next several weeks, and the broader macro picture could thus change pretty massively depending on developments along all of those fronts,” Hamid added.
— CNBC’s Yun Li and Pippa Stevens contributed reporting.
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