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Dow Cuts Gains on Stimulus Uncertainty as Mnuchin Says Talks to Continue

Published 09/30/2020, 01:13 PM
Updated 09/30/2020, 03:32 PM
© Reuters.

© Reuters.

By Yasin Ebrahim

Investing.com – The Dow cut some gains Wednesday, after U.S. lawmakers failed to reach an agreement on another coronavirus stimulus package, but pledged to continue talks. 

The Dow Jones Industrial Average added 0.91% or 250 points after rising about 570 points. The S&P 500 was up 0.38%, while the Nasdaq Composite rose 0.36%.

Investor hopes for further federal stimulus were dealt a blow somewhat after U.S. Treasury Secretary Steven Mnuchin touted progress on stimulus talks, but said they had yet to reach an agreement. The talks are set to continue with the House expected to vote on the $2.2 trillion package on Wednesday.  Ahead of his meeting with House Speaker Nanci Pelosi, Mnuchin told CNBC he was "hopeful" about getting a deal done.

The news cooled some optimism on stocks tied to the progress of the economy with airlines, cruise operators and banks cutting gains.  Airlines stand to lose big if Congress fails to reach an agreement on the proposed $2.2 trillion aid package that includes funds for the industry as well as unemployment benefits, direct payments to households and small business loans.

Citigroup (NYSE:C) rose more than 1%, United Airlines (NASDAQ:UAL) was up 0.5% and Norwegian Cruise Line Holdings (NYSE:NCLH) was up  3%.

The somewhat dour news on the stimulus offset a trio of bullish economic reports seen earlier.

The private sector created 749,000 jobs in September, according to ADP data on Wednesday, topping economists' expectations for a gain of the 650,000.

"We look for an 950K increase in Friday’s private payroll number, slowing marginally from 1,027K in August and 1,481K in July.  But this is far from certain, given the deviation between the ADP and official numbers since Covid struck," Pantheon Macroeconomics said in a note.

The housing market, meanwhile, remained robust as the National Association of Realtors survey showed pending home sales increased a record pace of 8.8% last month.

Homebuilders were sharply higher following the survey, with SPDR® S&P Homebuilders ETF (NYSE:XHB) up more than 1%, led by Lennar (NYSE:LEN), up more than 3%.

On the manufacturing front, Chicago PMI jumped to 62.4 from 51.2, markedly topping estimates of 52.

Tech also cut gains but remained among the biggest gainers. Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) traded above the flatline, while Amazon.com (NASDAQ:AMZN) and Facebook (NASDAQ:FB) fell into the red.

On the vaccine front, meanwhile, Moderna (NASDAQ:MRNA) CEO Stéphane Bancel reportedly told the Financial Times that a vaccine was unlikely to be delivered before U.S. election, forcing the stock to turn negative.

Latest comments

If Biden gets elected: He has said he will raise taxes. He will support the radical left (who have burned and looted all summer). The media will stop showing isolated race baiting events because they will not want social unrest. https://www.rasmussenreports.com/public_content/political_commentary/commentary_by_ted_rall/10_reasons_i_won_t_vote_for_biden
Republicans are ONLY interested in giving MASSIVE Tax Cuts to the wealthiest 1% and take everything away from the Working Class. Vote BLUE and save America.
As expected..an uneducated response from a republikkkan...Lol🤪🤪🤪
Democrats and Biden have already said they will raise taxes if Biden is elected ding bat.
America needs higher taxes. Look at our wealth inequality, failing school system and criminal white collar criminals. White collar criminals steal 1,000,000x more than rioters or looters.
gold should be shooting up !?
Drumpf and crony REPUBLICANS can not let WS down. it's their score card.
let's see if do nothing REPUBLICANS come to negotiation table.
Hope again?
Highlights of last night’s debate....Biden told Trump to “Shut up,” which he did. And Trump endorsed a far-right group, who hates everyone but white or orange male protestants. Very odd, though. If I use the exact name of the group and quote word for word exactly what Donny said this group should do, this Israeli site censors me. But remember, there is no right to free speech in Israel, which only selfishly cares about disrupting a peaceful Middle East.
hopefully this software is not connected to PEGASUS.
now you mentioned it. I wonder if this free israel software is related to PEGASUS?
Also highlight Biden said "I will raise taxes", he also denied his son got 3 million for doing a job he knew nothing about = kickback, and Biden said Antifa was an idea lol an idea? Last I saw they burn cities down, loot and *****
"deviation between the ADP and official numbers". I thought official numbers are real numbers. But i was mistaken.
deviation between the ADP and official numbers. I suggest that we should celibrate ADP data and shrugg-off official.
The do nothing Dems will just try and use their radical nonsense again.. 😴💤
Trump loves the Proud Boys!
you realize dems have a proposed bill? meanwhile Republicans just wanna keep low balling Americans. while happily bailing out the millionaires, shows who their interests are really for . not yours
proposed bill to bail out poorly run democratic governments. That is the crux of the matter here. They both agree on unemployment benefits and bail outs for the airlines, but the Dems want way too much money from that poorly run cities they were poorly run before the pandemic even hit.
2 Trillion och please don't tell the Kid's it will give them nightmares.
I'm so glad we have a market made of hopes and dreams and not actual data or we would be in some serious trouble.
Well the -31% GDP was a great forecast, almost impossible to be below that limit.
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