US stocks close lower after Treasury Secretary dampens expectations for stimulus deal being reached before election

Despite two days of declines, stocks are higher for October with the Dow, S&P 500 and Nasdaq up 3%, 4% and 5.7%, respectively

Goldman Sachs - Wall Street set for mixed open

4:05 pm: US equities drop for a second day

US stocks dropped for a second day after Treasury Secretary Steven Mnuchin dampened expectations for a coronavirus stimulus deal being reached before the presidential election.

Mnuchin’s comments came after the White House recently proposed $1.8 trillion for an aid package, which House Speaker Nancy Pelosi said wasn’t enough money. 

On the day, the Dow Jones Industrial Average declined 165 points, or 0.58%, to 28,514. The S&P 500 dropped 0.66% to 3,488 and the tech-heavy Nasdaq lost 0.80% to 11,786.

12:20 pm: Dow fades after positive start

The Dow Jones Industrial Average dropped 135 points, 0.5%, to 28,544.1; the Nadaq fell 83 points, 0.7%, to 11,780.3; and the S&P 500 lost 18 points, 0.5%, to 3,493.6.

"The lack of political progress in relation to the proposed coronavirus relief package and the setback with respect to the potential Covid-19 drugs are hanging over the markets," CMC Markets UK David Madden wrote. "A lacklustre mood is doing the rounds."

A coronavirus stimulus deal is looking less likely after House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin met Wednesday without reaching a deal.

Mnuchin said Wednesday that “getting something done before the election and executing on that would be difficult," according to CNBC.

10:30 am: Proactive North America headlines:

Mandalay Resources Corp (TSE:MND) (OTCQB:MNDJF) (FRA:R7X2) lifts full-year consolidated gold-equivalent output guidance after strong 3Q in Australia

Heritage Cannabis Holdings Corp (CSE:CANN) (OTCQX:HERTF) (FRA:2UE) appoints Umar Syed as president medical products role

ImagineAR Inc (CSE:IP) (OTCQB:IPNFF)  announces signing of reseller agreement with digital and physical sign manufacturer Sticky Media

Montoro Resources Resources Inc (CVE:IMT) (OTCMKTS:IMTFF) acquires added ground adjacent to Marathon Gold’s Valentine Lake gold property in Central Newfoundland

Viscount Mining Corp (CVE:VML) (OTCQB:VLMGF) (FRA:7VM) begins drilling at Silver Cliff property

Medallion Resources Ltd (CVE:MDL) (OTCPINK:MLLOF) narrows down search for right location for its rare earth production facility in North America

Mawson Gold Ltd (TSE:MAW) (OTCPINK:MWSNF) (FRA:MXR) joint ventures into the Whroo Goldfield in Australia

American Battery Metals Corporation (OTCQB:ABML) appoints University of San Francisco professor and former investment banker David Batstone to the board

Gevo Inc (NASDAQ:GEVO) (FRA:ZGV3) inks joint development agreement with TOTAL's polymers division to develop renewable isoamylene

Nomad Royalty Company Ltd (TSE:NSR) (FRA:IRLB) reports preliminary revenue of US$7.6M in third quarter from gold ounces sold

9.42am: US stocks start higher

The main Wall Street indices managed to make a positive start to Wednesday’s session as investors seemed to shrug off ongoing uncertainty to push forward with more gains.

In the first minutes of trading, the Dow Jones Industrial Average rose 0.14% to 28,721 while the S&P 500 climbed 0.09% to 3,515 and the Nasdaq was up 0.14% at 11,880.

Earnings appear to have been the main factor behind the continued optimism among traders, with earnings beats from big banks such as Goldman Sachs indicating that the economy may be in better shape than initially feared.

Some macro news may have also provided some positivity as producer prices were reported to have risen 0.4% in September, higher than the 0.3% consensus figure.

8.05am: Wall Street set for mixed open

Wall Street is expected to see a mixed open, with spread-better quotes pointing at a barely red S&P 500 while the Dow Jones Industrial Average and the Nasdaq are called higher.

Investors are weighing up the stimulus talks and the halts to COVID-19 trials by J&J and Eli Lilly, though markets are getting used to the ups and downs of pharma development.

However, Washington is still stalled over the stimulus package as both sides are not getting closer to an agreement.

“I struggle to see these differences being overcome before the election, the only comfort being that the Democrats are in a good position for a clean sweep, meaning any package could be larger again. But at what cost in the interim,” said Craig Erlam, analyst at OANDA Europe.

“Investor sentiment is proving very resilient against this backdrop, perhaps driven by an unwavering belief that the next month could deliver a stimulus package, Covid vaccine, a relatively peaceful election result and a Brexit deal.”

“That looks optimistic at the moment but equally, all of those individual outcomes are probably more likely than the alternative at this point. Some may take a little longer but all look likely.”

On the US agenda Goldman Sachs, Wells Fargo and Bank of America are scheduled to report today, after peer JP Morgan posted results suggesting it may be more optimistic about the economy than analysts anticipated.

Five things to watch for on Wednesday:

  • Banking results will continue to hold a lot of attention, with share price reaction to be eyed from Goldman Sachs Group Inc (NYSE:GS) after the group topped profit and revenue estimates
  • Meanwhile, Bank of America Corp (NYSE:BAC) will also be in focus, albeit for the opposite reasons after it beat profit forecasts but revenues fell short of estimates
  • Completing the banking schedule for today is Wells Fargo, which also saw its third quarter revenues come in ahead of consensus but lower year-on-year
  • Other stocks likely to hold attention are ConocoPhilip (NYSE:COP) following a Bloomberg report that the oil and gas firm is in talks to buy Concho Resources Inc (NYSE:CXO), and UnitedHealth Group Inc after the for-profit healthcare firm upgraded its full-year outlook after reporting third quarter results that beat expectations
  • In macro news, the US producer prices index for September will provide an indication of costs at the factory gates for American producers. The figure increased 0.3% in August, with September’s figures estimated to show another 0.3% rise

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