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US stocks tumble as Trump scotches stimulus talks

·3-min read
Federal Reserve Chair Jerome Powell called for more stimulus only hours before President Donald Trump ordered his staff to end talks
Federal Reserve Chair Jerome Powell called for more stimulus only hours before President Donald Trump ordered his staff to end talks

Wall Street stocks tumbled into the red as President Donald Trump pulled the plug on stimulus talks, apparently ending the prospect for another big fiscal package until after the US election.

Trump's Tuesday afternoon tweet scotching the talks undid optimism that had developed in recent days after House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin resumed negotiations on a follow-up measure to the $2.2 trillion CARES Act passed to blunt the coronavirus downturn.

After a benign session in Europe, US stocks appeared headed for another up day as well following Monday's rally. But Trump said on Twitter he's directed staff to halt the talks after accusing Pelosi of negotiating in bad faith.

"We made a very generous offer of $1.6 Trillion Dollars and, as usual, she is not negotiating in good faith. I am rejecting their request, and looking to the future of our Country," he wrote.

Trump's announcement came just hours after Federal Reserve Chair Jerome Powell called for more stimulus, saying "too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses."

Stocks immediately shifted lower, with all three major indices losing around 1.5 percent at the close.

"The fact that in the past few days, most reports were positive regarding the stimulus talks added to today's surprise," said Gorilla Trades strategist Ken Berman. "While the president pledged to pass a 'large' bill following the elections, the lack of quick support could weigh heavily on the consumer economy."

Losses were broad-based, with utilities the only one of 11 sectors to finish positive.

But the session was particularly bad for large tech companies such as Apple and Amazon. Airlines were another bruised sector, as any new stimulus measure was expected to include money to keep employees at the carriers on payroll.

Among other markets, oil prices pushed higher ahead of a hurricane that threatened offshore platforms in the Gulf of Mexico.

- Key figures around 1600 GMT -

New York - Dow Jones: DOWN 1.3 percent at 27,772.76 (close)

New York - S&P 500: DOWN 1.4 percent at 3,360.97 (close)

New York - Nasdaq: DOWN 1.6 percent at 11,154.60 (close)

London - FTSE 100: UP 0.1 percent at 5,949.94 (close)

Frankfurt - DAX 30: UP 0.6 percent at 12,906.02 (close)

Paris - CAC 40: UP 0.5 percent at 4,895.46 (close)

EURO STOXX 50: UP 0.4 percent at 3,233.30 (close)

Tokyo - Nikkei 225: UP 0.5 percent at 23,433.73 (close)

Hong Kong - Hang Seng: UP 0.9 percent at 23,980.65 (close)

Shanghai - Composite: Closed for a holiday

Dollar/yen: DOWN at 105.60 yen from 105.75 yen at 2100 GMT

Pound/dollar: DOWN at $1.2868 from $1.2979

Euro/dollar: DOWN at $1.1733 from $1.1783

Euro/pound: UP at 91.14 pence from 90.79 pence

West Texas Intermediate: UP 3.3 percent at $40.67 per barrel

Brent North Sea crude: UP 3.3 percent at $42.65 per barrel