Dow Sheds 375 Points After Stimulus Setback

This post was originally published on this site – 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) (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.