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Dow Sheds 375 Points After Stimulus Setback

Stock Markets Oct 06, 2020 04:06PM ET
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By Yasin Ebrahim

Investing.com – The Dow turned negative on Tuesday as President Donald Trump rejected U.S. House Speaker Pelosi's $2.4 trillion stimulus proposal, instructing his representatives to halt talks until after the election.

The Dow Jones Industrial Average fell 1.34%, or 375 points. The S&P 500 was down 1.4%, while the Nasdaq Composite fell 1.57%.

Trump accused the Pelosi of "not negotiating in good faith" and said her stimulus proposal was "in no way related to Covid-19."

The move dealt a blow to hopes of further stimulus, which Federal Reserve chairman Jerome Powell said was needed to ensure a robust recovery.

"Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses," Powell said in a speech at a virtual annual meeting held by the National Association for Business Economics. "Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth."

Value stocks -- those linked to the strength of the economy like financials, industrials, and materials -- fell into the red, dragging the broader market down.

Industrials were also held back by a fall in Boeing (NYSE:BA) after the aircraft maker cut its forecast for demand and warned it could take more than a decade to recover from the Covid-19 pandemic.

The aircraft maker forecasts demand for 18,350 commercial airplanes in the next decade, down 11% from its 2019 projection.

Tech, which had struggled for momentum intraday amid expectations that rising rates will hurt growth stocks, fell sharply.

Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) Alphabet (NASDAQ:GOOGL) Amazon.com (NASDAQ:AMZN) and Facebook (NASDAQ:FB), which together make up a quarter weighting of the S&P 500, down more than 2%.

Energy also ended in the red, though fears supply weather-related disruptions eased downside momentum. Still, demand concerns linger after the Energy Information Agency forecast output to fall by 800,00 barrels per day, a smaller decline than its previously monthly forecast for a 870,000 drop.

In other news, NVIDIA (NASDAQ:NVDA) ended higher after BMO raised its price target on the stock to $650 a share from $565 per share, citing higher earnings-per-share potential.

Dow Sheds 375 Points After Stimulus Setback
 

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Comments (130)
Tony Coll
Tony Coll Oct 07, 2020 4:18AM ET
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Has anyone noticed the democrats proposal keeps moving up? What happened to 2.2 trillion? Not sure they understand compromise/negotiation. And if they truly cared, because they know the senate will not accept a proposal over 2 trillion, then they would approve the 1.6 so they can get it out to the people.
Bulls MakeMore
Bulls MakeMore Oct 06, 2020 10:39PM ET
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Trump won't be bullied by Pelosi, plain and simple.
Kc Pc
Kc Pc Oct 06, 2020 9:43PM ET
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if Trump can't win again no one will win till new term.
Chris Sundo
Chris Sundo Oct 06, 2020 9:43PM ET
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if readers of your comment cant understand the logic of your comment they will politely ignore it.
Andy Yuan
Andy Yuan Oct 06, 2020 9:43PM ET
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Ur not in north Korea. Thats why here is election going on.
Tricky Dick
TrickyDick Oct 06, 2020 7:46PM ET
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In a few hours some BS news will come across that will "give investors hope" of a stimulus. This is getting so worn out.
Chris Sundo
Chris Sundo Oct 06, 2020 7:46PM ET
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.. including donnie saying 'oops, i meant the opposite' .. after he went long at noon today. -- After all, he needs to service 300M in debt soon and make a quick buck in the meantime ;)
Tricky Dick
TrickyDick Oct 06, 2020 7:44PM ET
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within a few hours we'll get some phony BS that all is good and they'll go back up. This is getting old.
Ankur Pandey
Ankur Pandey Oct 06, 2020 7:44PM ET
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Jay West
Jay West Oct 06, 2020 7:44PM ET
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Buy the dips I suppose.
New Jazenevd
New Jazenevd Oct 06, 2020 7:43PM ET
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Trump discontinues useless talks with pelosi to concentrate on more important issue: SCOTUS confirmation process. Correct decision.
Khalid Dokali
Khalid Dokali Oct 06, 2020 7:41PM ET
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No more easy "printed' money for lazy americans, if you want money just work hard
Chris Sundo
Chris Sundo Oct 06, 2020 7:37PM ET
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It's a bluff, guys. He bought stocks at the close and tmr morning he'll say 'I wasn't feeling well and I actually meant the inverse, sorry if I got you all messed up'.  Not sure if the SEC is recording all of this, but the way they've been acting I don't trust them either.
Christopher Dunson
Christopher Dunson Oct 06, 2020 7:34PM ET
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Pelosi turned down the 1.6 T offered by Trump.
New Jazenevd
New Jazenevd Oct 06, 2020 7:32PM ET
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No good reason to give money to dems. They will waste any amount.
 
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