Stocks Slide as Trump Cancels Plans for Stimulus Package
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- Stimulus negotiations terminated unexpectedly
- Ripple wave felt across the markets
- The pandemic could still affect trades in the coming period
Stimulus Talks Halted
The US stock indices are down in the premarket hours following a Twitter announcement by President Trump in which he stated that there will be no stimulus talks. The President tweeted on Tuesday that he had instructed his team to stop negotiating with Democrats until after the election.
The news of turning down the stimulus package was a surprise for the markets, which ended the day in the red, led by the Nasdaq Composite index down by 1.57% to 11,154.60. The S&P printed a loss of 1.40% to a close of 3,360.95. The DJIA lost 375.88 points or 1.34% and closed at 27,772.76.
The effect of the unexpected announcement was felt outside of the US, too. The overall market sentiment across asset classes turned from relatively optimistic to negative as Oil is down with 1.84%, Gold is down some $40 since its yesterday high and some of the major currency pairs, the EUR/USD and the GBP/USD are also lower trading lower today due to the strengthening of the Greenback.
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Federal Reserve Chairman Highlights Key Economic Data
In other news, the official press conference by Fed Chairman Jerome Powell had a relatively flat effect on stocks and currencies. He reassured that the recovery from the pandemic has been strong, however, Chair Powell also reaffirmed the need for an additional fiscal stimulus and added that the central bank is stable enough to allow it without it posing any adverse effects to the economy. In his speech, Powell mentioned that the jobless rate still has room to improve, even though it has fallen to 7.9% in September from its peak of 14.7% during the initial phase of the pandemic.
Now that the coronavirus aid package is off the table, market participants have more things to consider before placing their bets in any direction. Health experts and political leaders advise serious cautiousness in the weeks and months to come as the spread of COVID-19 could pick up the pace and create the need for another round of restrictions and lockdowns on the global scale. Markets will inevitably continue monitoring the US response to the COVID-19 threat. So we can expect higher volatility as we also brace for uncertainty just 27 days away from the US presidential election.