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US stocks close sharply lower as coronavirus deal deadline looms

Both the DJIA and the S&P 500 had their worst day since September 23

Wall Street sign with NTSE in the background
House Speaker Nancy Pelosi has imposed a 48-hour deadline for the White House to reach a coronavirus stimulus deal in order to get it done before the election on November 3

4:05 pm:  US equities tank on Pelosi deadline 

US stocks closed sharply lower as House Speaker Nancy Pelosi set a deadline to strike a deal on new coronavirus stimulus before the election. 

On the day, the DJIA dropped 410 points, or 1.44%, to 28,195. The S&P 500 tumbled 1.63% to 3,426 and the tech-heavy Nasdaq lost 1.65% to 11,478 as some big tech names sold off.

12:15 pm: Dow absorbs 180-point downward swing

Across the board, the major indices tumbled into the red despite a positive start. The Dow, which gained more than 100 points early on, was down 84 points, 0.3%, just after noon ET. The Nasdaq dropped 22 points, 0.2% to 11,649, and the S&P 500 slipped 10 points, 0.3%, to 3,473.

"The S&P 500 and the NASDAQ 100 are fractionally lower as trading is lacklustre," CMC Markets UK analyst David Madden wrote. "There has been more major news with respect to the proposed stimulus package and it has been a quiet session in terms of economic announcements. Traders seem to be sitting on their hands for now."

House Speaker Nancy Pelosi said in an interview with George Stephanopoulos on Sunday that she is giving the Trump administration 48 hours to reach a deal on a coronavirus relief package after speaking with Treasury Secretary Steven Mnuchin on Saturday. 

“The 48 only relates to if we want to get it done before the election [on November 3], which we do,” Pelosi said.

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9.45am: US indices start higher

US benchmarks started Monday higher as investor sentiment was buoyed due to an agreed stimulus package from Washington to help ease the coronavirus blow coming increasingly into view.

The Dow Jones Industrial Average added over 70 points at 28,677. The broader S&P 500 added around 17 at 3,500. The tech-laden Nasdaq exchange bounced up over 93 points at 11,763.

Over in London, the mood was less upbeat. The FTSE 100 dropped nearly 28 points at 3,891 in the middle of the afternoon session.

House Speaker Nancy Pelosi and Treasury secretary Steven Mnuchin are expected to hold more talks today after the former said on Saturday that the White House had just 48 hours to strike a deal with the Democrats that could pass before Election Day on November 3.

In election news, early voting in the key state of Wisconsin starts tomorrow, among other states. In-person voting begins today in Florida, Alaska, Arkansas, Colorado, Idaho and North Dakota.

Democrat Joe Biden’s national lead has fallen to 8.9 points, whilst in the battlegrounds Trump has reportedly narrowed his trail to 4.3 points.

8.00am: Optimism rules on Monday

US markets were pointing higher at the start of a new week amid rising hopes for a coronavirus vaccine by the end of the year and as the setting of a 48-hour deadline for finalisation of a US fiscal stimulus package raised expectations for a deal before next week’s elections.

Spread betting quotes suggest the Dow Jones Industrials Average will race 255 points higher at the outset to 28,749 on Monday, the 33rd anniversary of the 1987 "Black Monday" crash.

Meanwhile, the S&P 500 is set to open 18 points higher at 3,501 and the tech-heavy Nasdaq Composite is seen rising 218 points to 11,935.

“The proposed US coronavirus relief package remains in focus. Nancy Pelosi, of the Democrats, said that she is optimistic about a deal being struck before the US presidential election, but there was an acknowledgement that differences still exist,” said CMC Markets’ analyst David Madden.

“Some people are less convinced that an agreement can be reached ... by tomorrow – the deadline that Pelosi set out. It would seem that traders are taking the view that where there is a will there is a way attitude as the political landscape isn’t looking too great but US index futures are higher,” he added.

Traders were also drawing encouragement from Chinese data this morning, which while mixed, had some positive aspects that they were quick to spot.

“China’s third-quarter GDP growth figures were slightly below expectations, but the broad picture shows the key importance of virus containment as the dominant driver of recovery. Compared to the developed world, China’s growth has bounced back stronger and quicker - today’s print confirms that - without the kind of kitchen sink policy support unleashed in developed market countries as lockdowns came online in March,” said Fidelity International's Salman Ahmed.

Five things to watch on Monday:

  • Drugmaker Pfizer Inc said on Friday it could have a coronavirus vaccine ready in the United States by the end of this year.
  • Pharmacy chain CVS Health Corp on Monday said it will hire 15,000 employees in the fourth quarter of this year as the onset of winter could fuel a resurgence in the spread of coronavirus (COVID-19) and flu cases.
  • ConocoPhillips said on Monday it will buy Permian-focused driller Concho Resources Inc for $9.7 billion, the largest shale deal this year as oil and gas producers turn to consolidation to survive a slowdown in oil prices and demand.
  • Halliburton Inc. posted third-quarter figures showing adjusted earnings per share, at 11 cents, higher than analysts had expected but revenue of US$2.98bn was down 46% year-on-year and below the consensus forecast of US$3.09bn.
  • Alibaba Group Holdings said on Monday it will invest $3.6 billion to acquire a controlling stake in hypermarket operator Sun Art Retail Group Ltd., gaining further ground in China's retail market.

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