Dow Falls as Fiscal Stimulus Hopes Die With McConnell’s Senate Order

The Dow fell on Tuesday, as hopes of imminent government aid collapsed with Mitch McConnell’s decision to recess the Senate till November 9.
Senate Majority, Mitch McConnell
Senate Majority Leader Mitch McConnell has effectively put an end to stimulus hopes in the lead-up to next week's presidential election. | Image: AP Photo/Manuel Balce Ceneta
  • The Dow Jones fell 70 points on Tuesday.
  • Fiscal stimulus is now a distant dream for the stock market, as Mitch McConnell has recessed the Senate till November 9.
  • Consumer confidence is struggling as election concerns and coronavirus cases mount.

The Dow Jones limped to the downside on Tuesday as consumer confidence lagged. Coronavirus cases continue to soar, but with the Senate on recess till a week after the election, fiscal aid remains a distant dream for the U.S. stock market.

Dow Drops as Sell-Off Continues

It was a mixed day for the major U.S. stock market indices, as the Nasdaq rallied 0.8%, comfortably outperforming the Dow Jones. The S&P 500 was more subdued, with just a 0.2% gain.

Dow Jones, Stock Market
The Dow Jones fell 70 points on Tuesday. | Source: Yahoo Finance

On the economic data front, Tuesday brought some bad news as CB consumer confidence contracted slightly against expectations of an increase to 102 from last week’s reading of 101.3.

With stimulus talks dead in the water, there is unlikely to be much help coming for the U.S. economy until after the election. While this was often feared to be the case over the last few weeks, it was confirmed Monday when Senate Leader Mitch McConnell suspended the Senate until November 9, leaving election jitters at the forefront of the newswire.

Anxious Dow bulls are well aware this means that even a clean election result would see a bill passed weeks from now, with a tightly fought contest potentially putting it months away.

ING economist James Knightley believes that headwinds continue to mount for consumers. Fearing the expiry of unemployment benefits will only worsen household sentiment, there are a couple of wildcards to his bearish outlook:

With Federal unemployment benefits being tapered and millions of people having seen their 26 weeks of state benefits expire it adds to our sense of caution on consumer spending… The concern would intensify should we get a contested election, which could add to a sense of unease, while the spike in Covid-19 cases and the potential for some containment measures to be re-introduced would further weaken the outlook for both sentiment and spending. That said, news on a vaccine and a new fiscal stimulus would swiftly turn this situation around.

Consumer Confidence, Dow Jones, Stock Market
U.S. consumer confidence is under pressure as benefits fall and coronavirus cases rise. | Source: Think ING

Fox News Sees Biden Gain Ground in Georgia; Texas Still in Play

Tuesday brought better news for the Biden campaign after Fox News reported that the Democratic nominee is gaining ground in Texas and Georgia’s traditionally Republican strongholds. Although Biden is still considered a longshot to win Texas, as he remains 4 points down, he is just 1% behind in Georgia. Add a 6-point lead in purple Nevada, and things are looking better for Obama’s former VP.

Watch the video below for the latest analysis of the presidential race.

If the stock market’s ideal outcome is to know who has won on election night, Biden taking either Texas or Georgia might be the kind of big result that bulls are hoping to see.

Dow 30 Stocks: Megacaps Bounce, Boeing Down Again

On a mixed day for the Dow 30, trillion-dollar giants Apple and Microsoft were the engine for the market. Both rallied more than 1%, though Apple, in particular, does not have its usual sway over the Dow since its stock split. Apple is now only the 19th heaviest weighted company in the index.

Watch the video below for Morgan Stanley’s cautious take on risk assets.

Salesforce.com and Walmart were also bright spots, as the former managed a 3% gain and the latter around 1%.

Elsewhere, things were less buoyant, as Boeing, Caterpillar, and Cisco Systems all fell over 2%. UnitedHealth, the most heavily weighted stock in the Dow, fell 0.5%. Intel lost another 2% as it continues to struggle post-earnings.

Sam Bourgi edited this article for CCN - Capital & Celeb News. If you see a breach of our Code of Ethics or find a factual, spelling, or grammar error, please contact us.

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