Investors are increasingly concerned that Democratic lawmakers and the White House may not reach an agreement on a major stimulus package before election day.
Wall Street’s top three averages closed lower on Wednesday after a volatile trading session as investors worried that difficult negotiations in Washington, DC would result in a deal for a new US coronavirus stimulus package.
The Dow Jones Industrial Average closed 97.97 points, or 0.35 percent, at 28,210.82.
The S&P 500 – a measure of health in the U.S. retirement and college savings reports – lost 0.22 percent, while the tech-heavy Nasdaq Composite Index lost 0.28 percent.
White House Chief of Staff Mark Meadows said that while there are a number of differences between the White House and the Democrats in Congress, Republican President Donald Trump “is ready to lean in to work on an agreement.”
Before afternoon talks with Treasury Secretary Steven Mnuchin began, US House spokeswoman Nancy Pelosi said that despite opposition from Senate Republicans, there was still a chance of a deal, although she acknowledged the deal might not come until after election day Jan. November will pass.
“As long as they dangle the carrot out there that there is still the possibility that something will be done, investors remain optimistic,” said Michael James, general manager of stocks at Wedbush Securities in Los Angeles, California.
“If an agreement is reached, you’d rather have a longer commitment than too much cash. That’s a big if, “added James.
James said investors were hoping an agreement could be reached on Thursday.
“Everyone will be sitting on pins and needles waiting for the next headline until the end of tomorrow’s trading day,” he said.
After the closing bell, Pelosi spokesman Drew Hammill said the day’s session “brings us closer to pen-on-paper to make laws”.
Rather than plowing money into the market, Michael O’Rourke, chief market strategist at JonesTrading in Stamford, said that investors picked stocks when looking at third-quarter financial results.
Of the 11 major industries, nine closed lower, with energy leading the percentage declines. Communication services were the greatest asset.
Shares in Snap Inc, the owner of the Snapchat messaging app, rose 28 percent after beating projections for user growth and revenue as more people signed up to chat with friends and family during the COVID-19 pandemic had.
The news helped other social media companies gain 4 percent and Twitter Inc 8 percent in the communications services index with Facebook Inc. The smaller social media company Pinterest Inc also grew by almost 9 percent.
Sentiment, however, was dampened by Netflix Inc, which fell nearly 7 percent after boosting profits for the market’s high-flying club. The video streaming service exceeded expectations in terms of subscriber growth as competition increased and live sports returned to television.
Electric car maker Tesla Inc’s shares rose 4 percent after the closing bell after quarterly earnings were reported. Tesla beat analysts’ estimates for third-quarter revenue as it made record deliveries of vehicles and overcame disruptions from the COVID-19 pandemic.
Of the 84 S&P 500 companies that reported third-quarter results, 85.7 percent exceeded earnings expectations, according to IBES Refinitive data.
Investors are also keeping an eye on the upcoming elections. Trump and Democratic challenger Joe Biden will face each other in their second and final debate on Thursday night.