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Stocks - Wall Street Opens Lower Ahead of Tough Talks Over Stimulus

Published 07/28/2020, 09:26 AM
Updated 07/28/2020, 09:44 AM
© Reuters.

© Reuters.

By Geoffrey Smith 

Investing.com -- U.S. stock markets opened lower on Tuesday as investors turned cautious ahead of what's likely to be a tense few days of negotiations over the next round of measures to support the U.S. economy through the Covid-19 pandemic.

By 9:40 AM ET (1340 GMT), the Dow Jones Industrial Average was down 93 points, or 0.4%, at 26,492 points. The S&P 500 was down 0.2% and the Nasdaq Composite was down 0.4%. 

Senate Republicans outlined their proposals on Monday, with a sticker price of around $1 trillion. That leaves a big gap to bridge with the $3.5 trillion package of measures that has already passed the Democrat-controlled House of Representatives. Two of the thorniest differences between the plans are the Republicans' intention to cut the current enhancement of unemployment benefits by two-thirds from the start of October, and the Democrats' insistence of $900 billion of funds for state and municipal governments. 

Analysts warned that the proposed cuts could hit consumer spending, which accounts for the bulk of the U.S. economy, in more than one way. "Obviously, those out of work will experience a fall in income," said Paul Donovan, chief economist with UBS Global Wealth Management, in a morning briefing. "Those in work may experience an increase in fear of the consequences of unemployment. If fear does increase, the $1,200 (that is currently being distributed) would likely be saved rather than spent.

The major indexes suffered from a slew of mostly underwhelming earnings releases, notably from McDonald's (NYSE:MCD) and industrial giant 3M Company (NYSE:MMM), although the majority still managed to engineer the usual positive earnings surprise. McDonald's stock fell 1.4%, while 3M stock fell 4.5%. However, JetBlue stock pared early losses to be up 0.7%, despite the airline reporting a wider-than-expected loss and giving a downbeat outlook for the rest of the year.

Confidence remained the watchword after the Conference Board's consumer confidence index fell by more than expected in July, dropping to 92.6 from 98.3 in June.

One of the most prominent gainers was Pfizer  (NYSE:PFE) stock, which rose 2.0% after the pharma giant said its second-quarter earnings fell by less than expected in the three months through June, despite the fact that the pandemic had stopped its sales force from visiting healthcare professionals, and had also delayed demand for many of its medicines by disrupting hospital schedules.

Pfizer and its German partner BioNTech on Monday announced the start of a hybride phase 2/3 clinical test of their candidate vaccine for treating Covid-19. Moderna also announced the start of a phase 3 trial for its drug. Phase 3 tests are typically the last before a company seeks regulatory approval for a drug.

BioNTech (NASDAQ:BNTX) stock rose 0.7% while Moderna (NASDAQ:MRNA) stock rose 3.7%.

 

Latest comments

NAIC
Bail out of state and local governments is a non starter. I have no problems supporting the people who have lost their jobs including the government employees who are laid off and will be laid off, but bailing them out of their irresponsible behavior is unacceptable. I would like them to continue the benefits for people and stop bailing out failed companies and institutions.
$200 on top of the already too low unemployment benefit us way too low. Anarchists however shouldn't be able to collect it however.
Google keyboard everyone :(
Democrats will try to crater the stock market by delaying any stimulus agreement as long as they can.
what is a fake American citizen? How many generations have to live in America before you are a real American citizen according to you? You have such hateful comments that have no grounding. This is exactly what the political parties are trying to do right now in America: divide us. People like you can come on here and make hateful blanket statements because no one can touch you. You have fallen into the trap. Right where they want you. Last time I checked Americans were supposed to unite.
 I am sorry but you still keep misunderstanding my comment. Please note that it was a tentatively ironic answer to the very first post of this discussion.
So many comments. I see you have hit a nerve sir.
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