- US stocks sank on Wednesday as Treasury Secretary Steven Mnuchin dashed hopes of passing new stimulus before Election Day.
- Despite holding multiple calls with House Speaker Nancy Pelosi, “getting something done before the election and executing on that would be difficult,” Mnuchin said at a conference.
- Goldman Sachs shares climbed after the bank handily beat estimates for third-quarter revenue and earnings.
- Bank of America and Wells Fargo fared worse, with both firms citing historically low interest rates for their weaker-than-expected profits.
- Watch major indexes update live here.
US equities erased early gains and slid on Wednesday after Treasury Secretary Steven Mnuchin curbed optimism that a stimulus deal could be reached before election day.
The Trump administration official cited political dynamics between Democrats and Republicans as a major hurdle for reaching a compromise on new economic aid. Revived hopes for fresh stimulus lifted stocks in recent weeks as investors bet on a package to accelerate the slowing US economic recovery.
Yet multiple calls between House Speaker Nancy Pelosi and Mnuchin have yielded little progress, and a near-term deal remains unlikely.
“At this point getting something done before the election and executing on that would be difficult, just given where we are in the level of details,” Mnuchin said at a conference.
Here’s where US indexes stood at the 4 p.m. ET market close on Wednesday:
- S&P 500:3,488.67, down 0.7%
- Dow Jones industrial average: 28,514.00, down 0.6% (166 points)
- Nasdaq composite:11,768.73, down 0.8%
To be sure, plenty of signs emerged throughout the week signalling an inability for Congress to reach a deal. Pelosi reiterated her criticism of the White House’s $US1.8 trillion proposal on Tuesday saying the bill lacked sufficient funding for COVID-19 testing, small-business relief, and state and local governments, among other areas.
Senate Majority Leader Mitch McConnell said Tuesday afternoon the body would vote on a smaller stimulus measure later this month that would include more funding for the Paycheck Protection Program and expanded unemployment benefits. Pelosi has indicated Democrats would rather pass a larger package than take a piecemeal approach to new aid.
While the White House backed a major package just this week, Mnuchin’s comments suggest the administration is moving more in line with McConnell in shelving a larger package as the election looms.
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Investors also mulled mixed results from banks reporting third-quarter earnings. Goldman Sachs trounced profit and revenue expectations with its Wednesday morning report. A steep decline in loan-loss reserves lifted earnings, and trading desks outperformed through the volatile summer. Bond-trading revenue in particular thrashed estimates and climbed 49% from the year-ago period.
Bank of America posted less stellar results, leading shares to slump after the open. It said historically low interest rates slammed net interest income and led the firm to miss estimates for third-quarter revenue. Quarterly earnings came in just above the consensus analyst expectation.
Wells Fargo shares sank after the bank missed earnings expectations. The firm echoed Bank of America in citing low interest rates for its shortfall.
Morgan Stanley is set to wrap up banks’ earnings season when it reports results on Thursday morning.
Energy and industrial stocks posted mild gains in their outperformance throughout the session. Consumer discretionary and communications stocks fell the most.
Spot gold hovered around its $US1,900-per-ounce support level after dipping just below it on Tuesday.
Oil surged out of an early decline and stayed above $US40 per barrel. West Texas Intermediate crude climbed as much as 2.4%, to $US41.15 per barrel. Brent crude, oil’s international benchmark, gained 2.3%, to $US43.44 per barrel, at intraday highs.
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